TAXATION 


OP 


Kailroads  and  Railroad  Securities. 


REPORT  OF  A  COMMITTEE 


TO  A 


CONVENTION^OF  RAILROAD  COMMISSIONERS 

Held  at  Saratoga  Springs,  June  10,  1879^ 


TOGETHER  WITH  A 


SUMMARY  OF  LAWS  IN  RELATION  TO  RAILROAD  TAXATION  IN 

FORCE  IN  THE  VARIOUS  STATES  OF  THE  UNION 

AS  WELL  AS  FOREIGN  COUNTRIES. 


MADISON,  WIS.: 

DAVID  ATWOOD,   STATE  PEINTEB. 
1880. 


3  -5  = 


\ 


STATE  OF  WISCONSIN. 


Ui 


m  SENATE. 


In  the  senate  on  the  23d  of  January,  Senator  Woodman  offered 
the  following  resolution  : 

Res.  No.  16,  S.  I 

Re.iolved,  That  the  railroad  commisgioner  is  requested  to  furnish 
the  senate  with  the  report  of  the  committee  of  the  national  con- 
vention of  railroad  commissioners  on  the  subject  of  the  taxation  of 
railroads  and  railroad  securities,  togeiher  with  the  abstract  of  the 
laws  of  various  states  and  nations  on  the  same  subject,  which  is  ' 
embodied  therewith,  and  that  the  clerk  of  the  senate,  on  receipt  of 
said  report,  is  hereby  directed  to  cause  twelve  hundred  copies 
thereof  to  be  printed, %ne  thousand  of  which  shall  be  for  the  use 
of  the  legislature,  and  the  remainder  for  the  official  use  of  the 
railroad  commissioner. 

The  resolution  was  laid  over,  under  the  rules,  and  on  the  26th 
was  taken  up  in  its  order  and  adopted. 

^   ,,  Madison,  Janwary  27, 1880. 

Hon.  J.  M.  Bingham, 

Lt.  Governor  and  President  of  the  Senate: 
Sir  :  I  have  the  honor  to  transmit  herewith  for  the  use  of  the 
senate,  the  inclosed  report  of  committee  of  railroad  commissioners 
on  taxation  of  railroads  and  railroad  securities  made  under  date 
of  December  1, 1879,  with  the  accompanying  compendium  of  laws 
of  different  states  and  nations  on  the  subject  of  railroad  taxation,  in 
obedience  to  Res.  No.  16,  S.,  and  respectfully  request  that  the 
same  be  printed. 

Very  respectfully, 

A.  J.  TURNER, 

Bailroid  Commissioner. 


^  ■S'~\^  ^  "^ 


REPORT  OX  TAXATION  OF  RAILROADS 

AND  RAILROAD  SECURITIES. 


The  committee  appointed  at  the  last  (Columbus)  convention  of 
railroad  commissioners  to  examine  into  and  report  the  methods 
of  taxation  as  respects  railroads  and  railroad  securities,  now  in  use 
in  the  various  states  of  the  Union,  as  well  as  in  foreign  countries, 
and,  further,  to  report  a  plan  for  an  equitable  and  uniform  system 
for  such  taxation,  present  the  following 

REPORT. 

Shortly  after  the  last  convention  of  commissioners,  your  com- 
mittee issued  a  circular  and  accompanying  interrogatories  in  rela- 
tion to  the  matter  referred  to  them  for  investigation,  which  were 
sent  to  all  the  state  executives,  and  to  a  large  number  of  the 
leading  railroad  corporations  of  the  country.  Through  the  court- 
esy of  the  State  Department  at  Washington,  the  representatives 
of  the  national  government  at  the  principal  capitals  in  Europe 
were  also  called  upon  for  information  on  the  railway  tax  systems 
there  in  use.  As  a  result,  some  sixty  answers  were,  in  all,  re- 
ceived, covering  the  various  states  of  the  Union,  Canada,  Eng- 
land, France,  Belgium,  Holland,  Germany,  Russia,  Switzerland 
and  Austro-Hungary.  The  information  contained  in  these  an- 
swers is  much  of  it  of  great  value,  especially  in   the  case  of  the 

documents  relating  to  the  sj'stems  of  taxation  in  use  in   foreign 

» 

countries.  These  the  committee  have  printed  in  full  as  part  of 
the  present  report,  as  the  facts  and  statements  contained  in  them 
are  not  elsewhere  to  be  found  in  any  easily  accessible  shape.  A 
compendium  of  the  systems  in  use  in  all  the  states  of  the  Union 
has  been  prepared,  and  likewise  forms  a  part  of  this  report. 

On  examining  this  compendium  of  state  systems  in  present  use 
in  this  country,  it  will  at  once  be  observed  that  they  are  much 


more  varied  than  would  naturally  be  supposed,  or,  perhaps,  than 
would  have  been  thought  possible.  Generally,  it  may  be  said, 
there  is  no  one  principle  running  through  the  various  systems  de- 
scribed ;  and  further,  that  there  is  no  method  of  taxation  possible 
to  be  devised  which  is  not  at  this  time  applied  to  railroad  prop- 
erty in  some  part  of  this  country.  So  far  as  those  now  well  recog- 
nized principles  which  should  be  at  the  basis  of  all  systems  of 
taxation  are  concerned,  they  would  as  a  rule  seem  to  have  been 
utterly  ignored. 

In  two  adjoining  states,  for  instance,  with  roads  belonging  to 
one  company  operating  in  both,  will  be  found  on  one  side  of  the 
line  a  system,  simple,  direct,  equitable,  imposing  a  moderate 
and  fixed  burden  from  which  there  is  no  escape,  while  on  the 
other  side  of  the  line  will  be  met  a  system  which  can  be  said  to 
be  based  on  nothing  more  reliable  than  arbitrary  guess-work.  In"^ 
certain  states,  the  railroads  are  apparently  looked  upon  as  a  species 
of  wind-fall  from  which  everything  which  can  be  exacted  in  the 
way  of  taxation  is  so  much  pure  gain.  In  other  states  they  es- 
cape with  very  slight  and  wholly  disproportionate  burdens.  The 
franchise  tax,  the  gross  and  net  earnings  tax,  the  personal  property 
tax,  the  realty  tax,  are  all  met  with  indiscriminately ;  applied 
sometimes  by  local  boards,  sometimes  by  boards  of  state  equali* 
zation,  but  almost  invariably  in  utter  disregard  of  any   principle. 

A  more  striking,  and  in  some  respects  discouraging,  example 
of  general  confusion,  as  regards  an  important  matter  of  fiscal  legis- 
lation could  hardly  be  imagined. 

The  conclusion  reached  by  the  committee  as  the  result  of  their 
investigations  can  be  very  briefly  stated.  The  requisites  of  a  cor- 
rect system  of  railroad,  as  of  other  taxation,  are  that  it  should,  in 
so  far  as  it  is  possible,  be  simple,  fixed,  proportionate,  easily  ascer- 
tainable and  susceptible  of  ready  levy.  Very  few  of  the  systems 
now  in  use  in  this  country  were  found  to  possess  any  of  these 
requisites.  So  far  from  being  fixed,  they  are  most  of  them  ex- 
tremel}'-  arbitrary  and  fluctuating.  -Neither  are  they  proportionate, 
as  in  some  cases  the  measure  of  valuation  is  the  market  price  of 
securities  ;  in  others,  the  arbitrary  estimates  of  appraisers  ;  in  yet 
other?,  gross  receipts ;  and  in  others,  local  assessment.  That  the 
tax  should  be  almost  impossible  of  ascertainment  under  these 


circumstances  does  not  need  to  be  said.  As  to  being  susceptible 
of  ready  levy,  any  tax  assessed  on  and  paid  by  a  railroad  corpo- 
ration is  that ;  but  it  would  appear  that  a  large  portion  of  ihe 
taxes  now  nominally  levied  must  either  be  evaded,  or  else  are  in 
the  nature  of  double  taxation,  for  the  securities  on  which  they 
are  assessed  are  in  the  eye  of  the  law  personal  property,  accessi- 
ble at  the  residence  of  the  owner. 

If,  therefore,  these  securities,  whether  bonds  or  stock,  are  taxed 
to  the  corporation  in  the  state  where  its  road  is  situate  1,  they  are 
as  personal  property  subject  to  a  further  tax  in  the  place  of  the 
holders  residence,  if  he  happens  to  reside  in  another  state  ;  if 
such  securities  are  not  taxed  to  the  corporations,  then,  whether 
they  are  taxed  at  all  must  depend  upon  the  honesty  of  the  holder 
wherever  he  lives,  or  the  astuteness  of  the  local  tax-gatherer. 
The  utmost  inducement  to  fraud  and  evasions  is  thus  systematic- 
ally held  out.  For  the  conscientious  holder  of  stock  or  bonds 
there  may  be  no  escape  from  double  taxation  of  the  most  oppres- 
sive kind,  while  for  the  unscrupulous  the  door  for  evasion  is  wide 
open. 

The  conclusion  at  which  your  committee  arrived  was,  that  all 
the  requisites  of  a  sound  system  were  found  in  taxes  on  real  prop- 
erty and  on  gross  receipts,  and  in  no  others  —  in  fact,  that  when 
these  were  propsrly  imposed,  n3  other  taxes  were  or  could  be 
necessary,  as  nothing  would  escape  untaxed.  Under  this  system, 
the  real  estate  of  the  railroad  corporations,  held  for  corporate  use 
outside  of  their  right  of  way,  would  be  locally  assessed  exactly  in 
the  same  way  as  the  real  estate  of  private  parsons  or  of  other  cor- 
porations adjoining  it  was  assessed.  There  would  be  no  distinc- 
tion made  in  regard  to  it.  It  is  the  ordinary  tax  on  real  property. 
Beyond  that  a  certain  fixed  percentage,  established  by  law  and  of 
general  applicition,  should  be  assessed  on  the  entire  gross  earn- 
ings of  the  corporations,  and  this  should  be  in  lieu  of  all  forms  of 
taxation  on  what  is  known  as  personal  property.  Under  this 
system  th3  rolling  stock  of  th3  corporation  would  not  be  assess- 
able; nor  its  securities,  whether  sto3k  or  bonds,  either  indirectly 
through  the  corporation  or  directly  in  the  hands  of  those  owning 
them.  The  entire  burden,  be  the  same  more  or  less,  would  be 
imposed  in  one  lump  on  the  corporation  and  levied  directl3^     It 


does  not  need  to  be  pointed  out  that  this  system  is  perfectly  sini-' 
pie  ;  that  under  it  taxation  is  fixed  by  a  general  law  and  not  by 
local  valuations;  that  it  is  thoroughly  proportionate,  inasmuch  as 
the  amount  levied  depends  on  the  volume  of  gross  receipts  ;  finally, 
it  can  be  ascertained  by  any  one,  and  can  by  no  possibility  be 
evaded. 

The  apportionment  of  a  levy  on  gross  receipts  among  the  sev- 
eral states  through  which  a  single  railroad  may  run  is  in  this 
country  undoubtedly  attended  with  much  difficulty,  and  the  com- 
mittee have  given  careful  consideration  to  the  subject.  The  con^ 
elusion  at  which  they  have  arrived  is  that  it  should  be  made  a 
matter  of  mutual  understanding  among  the  states,  and  that,  as  the- 
levies  must  be  independent,  they  should  be  apportioned  according 
to  mileage.  That  is,  real  estate  owned  by  each  corporation,  out- 
side of  its  right  of  way,  should  be  locally  assessed  where  it  is  sit- 
uated, without  regard  to  the  fact  that  it  belongs  to  a  corporation 
and  is  used  for  railroad  purposes.  The  vast  and  costly  terminal 
grounds  in  New  York,  Chicago  and  all  the  other  great  trade-cen- 
tvei  would  thus  be  locally  taxed  at  thosQ  centres,  and  on  the  basis 
of  valuation  for  similar  adjoining  land  there  in  use.  Eeal  estate 
in  the  country,  on  the  other  hand,  would  be  taxed  at  the  country 
or  agricultural  valuation.  The  realty  outside  of  the  right  of  way 
being  thus  disposed  of  for  purposes  of  taxation  on  fixed  princi- 
ples easily  understood,  the  entire  gross  earnings  of  the  corpora- 
tions should  be  subject  to  assessment  by  each  state  through  which 
its  road  might  run,  in  the  proportion  which  the  miles  of  the  road 
in  that  state  bear  to  its  whole  number  of  miles.  The  percentage 
of  the  levy  would  then  be  greater  or  smaller  according  to  the  law 
of  the  state,  but  the  proportion  of  the  whole  amount  upon  which 
the  levy  was  to  be  made  would  be  fixed  and  always  easy  of  ascer- 
tainment. 

The  disposition  to  be  made  of  the  tax  thus  levied  when  paid 
into  the  hands  of  the  state  authorities — whether  it  should  be  re- 
tained in  the  state  treasury  or  distributed  among  localities,  either 
those  through  which  the  road  might  run,  or  those  in  which  the 
holders  of  its  securities  reside  — would  be  matter  for  adjustment 
by  legislation.  It  could  either  be  retained  in  the  state  treasury  or 
paid  back  into  the  local  treasuries  of  the  counties  or  towns  in  which 


the  roads  are  located  on  mileage  proportions,  or  ratably  distributed 
among  all  the  municipalities  of  the  state.  It  is  a  tax  on  trans- 
portation, whether  of  persons  or  property.  It  is  very  possibly  as 
equitable  a  method  of  raising  money  by  taxation  as  can  be  de- 
vised. If  it  could,  therefore,  once  be  uniformly  and  properly  ad- 
justed, the  distribution  of  the  results  of  the  tax  would  present 
very  few  difficulties.  All  communities  and  every  part  of  each 
community  are  dependent  more  or  less  directly  on  railroad  trans- 
portation. A  general  tax  upon  it,  if  properly  imposed,  would  be 
felt  not  unequally  by  all,  and  might  perhaps  not  unjustly  be 
shared  by  all.  Where  the  tax  on  railroads  is  now  levied  as  au 
entirety  by  the  state  government,  the  most  usual  method  of  dis- 
tribution is  to  divide  it  among  th«  counties  and  municipalities 
through  which  each  road  runs  in  proportion  to  the  length  of  it 
therein.  In  Massachusetts  the  tax  is  paid  over  to  the  place  of 
residence  of  the  individual  stockholder,  and  any  undistributed 
'balance  is  paid  into  the  treasury  of  the  state.  In  Michigan  the 
■whole  amount  of  the  tax  is  paid  to  and  retained  by  the  state,  be- 
ing devoted  to  special  purp:)ses.  In  Mississippi,  where  there  is  a 
franchise  tax,  one-half  of  it  goes  to  the  counties  through  which 
the  road  runs,  the  balance  to  the  state.  In  New  Hampshire, 
again,  one-fourth  of  the  tax  is  paid  to  the  towns  through  which 
the  road  passes,  in  proportion  to  the  amount  expended  in  each 
town  for  right  of  way  and  taxes.  The  other  three-quarters  is  di- 
vided among  the  towns  in  proportion  to  the  stock  owned  therein. 
In  this  respect,  therefore,  as  in  all  others,  the  existing  state  sys- 
tems aflfi)rd  every  variety  of  precedent.  The  disposition  to  be 
made  of  a  tax  after  it  is  collected,  in  no  way,  however,  affects  the 
question  of  the  proper  method  of  collecting  it.  It  must  so  largely 
depend  on  local  exigencies  that  no  general  rule  regulating  it 
would  seem  to  be  possible. 

Finally,  the  committee  will  say  that,  of  all  the  systems  of  taxa- 
tion examined  by  them,  those  in  use  in  England,  among  the  coun- 
tries of  Europe,  and  in  Michigan  and  Wisconsin  among  the  states 
of  the  Union,  seem  to  them  most  intelligent,  and  in  con- 
formity with  correct  principles.  The  Michigan  and  Wisconsin 
systems  would  seem  to  be  especially  commendable.  The  sys- 
tems in  use  io  many  of  the  older  states,  on  the  contrary,  and  nota- 


bly  in  the  states  of  Massachusetts,  New  York,  Pennsylvania  and 
Ohio,  are  very  cumbersome,  and  present  hardly  any  features 
worthy  of  study  or  imitation. 

That  of  Massachusetts,  for  instance,  is  based  upon  no  recog- 
nized principle,  would  admit  of  e.asions  in  a  most  obvious  way, 
and  is  impossible  of  any  general  application.  The  fundamental 
idea  with  it  is,  that  the  capital  stock  represents  the  property,  and 
that  its  market  value  will,  therefore,  approximately  measure  it  for 
purposes  of  taxation.  A  heavily  bonded  road,  under  this  system, 
practically  escapes  taxation ;  and,  again,  where  the  stock  is  owned 
outside  of  the  state  in  which  the  road  is  situated,  the  tax  levied 
on  it  inures  not  to  the  state  of  the  owner's  residence  but  to  that 
in  which  the  property  is  located.  Under  such  a  system  it  hardly 
needs  to  be  said  that  the  taxation  fluctuates  widely  in  amount, 
and  that  the  amount  of  debt  behind  the  capital  stock  being  dis- 
regarded, the  burden  bears  little  or  no  necessary  relation  to  actual 
earning  capacity,  whether  net  or  gross.  Clumsy  and  devoid  of 
scientidc  merit  as  it  unquestionably  is,  however,  tiie  Massachu- 
setts {system  would  seem  to  be  preferable  to  that  still  in  use  in 
New  Yoik,  concerning  which  the  state  assessors  in  their  annual 
report  for  1873  expressed  the  opinion  that  under  it  there  was  "  no 
uniform  rule  for  any  road,  in  any  county,  each  assessor  being 
governed  entirely  by  his  own  views."  In  certain  towns  the  rail- 
roads appear  to  pay  about  one-third  of  the  entire  taxes,  while  the 
assessed  valuation  now  (1878)  varies  from  $iOO  par  mile  to  j5lOO 
per  rod. 

"The  difference  in  the  assessment  of  the  New  York  Central  & 
Hudson  River  Road,  where,  for  all  the  purposes  that  the  road 
can  be  used,  it  is  of  the  same  value  to  the  company,  is  $2i,000 
per  mile.  In  short,  it  is  scarcely  an  exaggeration  to  say  that  the 
assessments  are  as  unlike  as  the  complexion,  temperament  and 
dispositions  of  the  assessors."  It  does  not  need  to  be  pointed  out 
that  a  system  such  as  this —  and  it  is  the  system  in  most  general 
use — compels  the  corporations,  in  self-defense,  to  an  ajtive  par- 
ticipation in  local  politics.  Indeed,  it  is  not  too  much  to  say, 
that,  as  a  system,  it  is  open  to  almost  every  conceivable  objection. 

It  does  not  seem  necessary  to  proceed  in  the  enumeration  of 
states,  as  the  objections  to  which  the  system  of  each  is  open  will 


readily  sagg3st  themselves  to  any  one  at  all  familiar  with  the 
principles  of  correct  taxation  on  reference  to  the  accompanying 
abstract  of  these  systems.  It  is  very,  very  apparent  that  the  sub- 
ject of  railroad  taxation  is  one  which  in  this  country  has  as  yet 
received  very  little  mature  consideration.  With  a  view  to  afford- 
ing some  basis  for  better  legislation,  the  committee  submit  with 
the  accompanying  documants  the  following  form  of  law  in  which 
the  phraseology  of  the  Michigan  statute  has  been  very  closely 

followed. 

C.  F.  Adams.  Jr.,  of  Massachusetts. 

W.  B.  Williams,  of  Michigan. 

J.  H.  Oberly,  of  Illinois. 
December  1,  1879.  Committee. 

DRAFT   OF   LAW. 

Sec.  I.  Every  corporation,  person  or  association  owjiing  or 
operating  any  railroad  or  any  portion  thereof  in  this  state,  shall 

on  or  before  the day  of in  each   year  pay  to  the  state 

treasurer  an  annual  tax  upon  the  gross  receipts  of  said  railroad, 
computed  in  the  following  manner,  viz  :     Upon  all  gross  receipts 

not  exceeding thousand  dollars  in  amount  per  mile  of  road 

actually  operated, per  cent,  of  such  gross  earnings ;  upon  such 

gross  receipts  in  excess  of thousand  dollars  per  mile  so  oper- 
ated,  per  cent,  thereof,  which  shall  be  in  lieu  of  all  other  taxes 

upon  the  property,  capital  stock  or  evidences  of  indebtedness  of 
such  corporations,  except  such  real  estate  as  lies  outside  of  the 
location  for  a  right  of  way  exclusively,  not  exceeding  —  rods  in 
width. 

Sec.  II.  The  real  estate  lying  outside  of  such  location,  shall 
be  liable  to  taxation  in  the  same  manner  as  other  real  estate  in 
the  same  place. 

Sec.  III.  When  a  railroad  lies  partly  within  and  partly  with- 
out this  state,  there  shall  be  paid  into  the  state  treasury  such  pro- 
portion of  the  tax  imposed  by  the  first  se3tion  of  this  act,  as  the 
length  of  its  operated  road  in  this  state  bears  to  the  whole  length 
thereof. 


11 


APPENDIX. 


Eeports  on  the  systems  of  railroad  taxation  in  use  in  the  follow- 


ing  c 

oun1 

tries  : 

1. 

Austria. 

6. 

Germany. 

2. 

British  America. 

7. 

Holland. 

3. 

4. 

Belgium. 
England. 

8. 
9. 

Hungary. 
Kussia. 

5. 

France. 

AUSTRIA. 

10. 

Switzerland. 

,  Legation  of  the    United   States^ 

ViENN-A,  March  15,  1879. 

Sir:  In  obedience  to  your  instructions  under  date  of  Feb.  18, 
1879,  requesting  information  touching  the  system  of  taxation  of 
railroads  in  this  empire,  I  have  now  the  honor  to  make  the  fol- 
lowing report.  The  system  of  the  two  halves  of  the  empire  be- 
ing established  independently,  as  of  two  independent  states,  I  give 
first  that  of  Austria. 

I.  "  On  what  general,  recognized  principle,  if  any,  is  the  rail- 
road taxation  of  Austria-Hungary  based?" 

A.  On  that  of  absolute  assimilation  to  the  system  of  taxation 
applied  to  individuals.  The  corporation  is  treated  as  if  it  were 
an  individual  owning  the  same  property. 

II.  "  In  how  far  are  the  railroads  taxed  as  owners  of  realty?" 
A.  All  their  realty  is  taxed.     Their  laud,  which  is   taken  for 

the  line  from  the  adjoining  agricultural  lands,  continues  to  be 
taxed  as  land  at  the  same  rate  as  the  lands  adjoining  it.  Their 
town  real  estate  is  taxed  in  the  same  m  inner  as  the  neighboring 
private  real  estate  is  taxed.  There  is  for  all  owners  of  realty  a 
ground  tax,  distinguishing  between  the  value  of  the  land  and  of 
the  buildings  erected  thereon.  The  same  rule  and  rate  apply  to 
railroad  real  property  in  the  town. 

III.  "  In  how  far  as  holders  of  personalty?" 

A.  They  are  considered  as  having  no  personalty  which  is  not 
either  produced  or  rep^'esented  by  franchise  or  income,  or  net  earn- 
ings of  some  sort.  And  all  these  are  taxed  on  the  same  principle 
as  those  of  individuals.  In  Austria  all  enterprises  [Ei'werbe,  busi- 
ness undertakings]    are    taxed,  whether  undertiken  by  an  indi- 


12 

viJual.  or  a  share  company,  from  that  of  a  shoemaker  to  that  of 
coastruction  of  a  great  railroad.  All  are  regarded  in  a  certain 
sense  as  franchises  and  so  are  annually  taxed,  but  usually  to  a 
very  small  amount. 

IV.  "  In  how  far  are  they  subject  to  a  franchise  tax  ?  " 

A.  They  are  subject  to  no  franchise  tax  differing  in  principle 
from  that  appliei,  as  above  stated,  to  individuals  {Erwerbsteuer). 
The  amount  of  the  original  concession,  or  franchise  tax,  in  the 
case  of  share  railroads  is  15.75-100  florins,  or  about  $7.55  per 
annum,  a  tr.fl  ng  amount  of  little  significance,  except  as  main- 
taining the  principle  of  a  franchise  tax.  But  there  is  also  by  law 
an  additional  annual  tax  on  the  enterprise  {Eriuerbsteuer),  regu- 
lated according  to  its  capital  and  extent,  and  reaching  at  the  highest 
1,575  florins  in  the  case  of  the  largest  enterprises,  and  as  the 
ordinary  tax. 

V.  "  In  how  far  is  their  stock  taxed  as  personalty  to  its  own- 
ers?" 

A.  Eich  share  usually  represents  the  nominal  value  of  two 
hundred  florins,  with  the  exception  (E  believe  of  the  NordhaJut), 
where  they  are  issued  at  the  rate  of  one  thousand  florins  per 
share.  The  issue  of  shares  and  of  provisional  certiflcatss  is  subject 
to  a  stamp  duty  of  fl.  1.25100  for  each  fl.  200  of  nominal  value. 
At  the  same  rate  is  taxed  the  issue  of  priority  bonds  issued  bj'  the 
company  to  their  purchasers ;  except  that  when  the  bonds  are  tem- 
porary, having  less  than  ten  years  to  run,  and  are  issued  in  a  partic- 
ular name,  the  rate  of  tax  is  reduced  to  fl.  1.25-100  for  each 
fl.  400  of  nominal  value ;  that  is  to  say,  is  reluced  one  half, 

When  the  bonds  or  shares  bear  coupons  calling  for  tweni}-  flor- 
ins or  less,  each  coupon  bears  a  stamp-tax  of  seven  Kreuzers  (8^ 
cents).  When  the  coupon  calls  for  larger  sum^,  their  stamp  duty 
amounts  to  about  3|-  per  mile.  These  stamp  duties  properly 
affect  the  owner  of  the  coupon,  but  are  in  fact  usually  assumed 
and  paid  by  the  company. 

There  appears  to  be  no  annual  tax  upon  shares,  as  such  ;  but 
income  from  them  is  fully  taxed  to  the  owner,  at  the  income  rate 
fixed  by  law. 

YI.  "  What  taxes  are  levied  on  the  receipts  of  the  companies, 
whether  net  or  gross  ?  " 


13 

A.  Net  receipts  are  ascertained  as  follows :  All  collections  of 
money  for  transport,  whether  of  passengers,  baggage,  freight,  ex- 
press goods,  or  other  transport  charges,  and  all  sums  derived 
from  the  letting,  or  rent,  or  other  usnfract,  of  property  which  is 
not  subject  to  other  taxation  —as  to  the  land  and  house  tax,  for 
example  — constitutes  the  gross  receipts.  From  this  aggregate 
may  be  deducted  the  sums  disbursed  — 

(a)  for  expenses  of  the  administration  of  the  company  ; 
{b)  for  current  running  expenses ; 

(c)  for  maintenance  of  the  road,  including  repairs,  replacement 
of  perishable  property,  of  rails,  bridges ; 

{d)  all  stamps  and  taxes  paid  in  the  course  of  their  business, 
and  generally  all  expenses  incurred  in  conducting  their  enterprise, 
and  for  maintaining  an  efficient  condition  of  all  its  parts. 

On  the  other  hand,  these  may  not  be  deducted  from  the  gross 
income  — 

a)  their  payments  of  interest ; 

(6)  the  annual  quotas  paid  for  the  liquidation  of  the  capital,  or 
of  the  bonded  debt  of  the  enterprise,  nor  any  requirement  of 
capital ; 

(c)  the  fees  paid  to  the  directors  for  their  services  ; 
{d)  the  contributions  made  by  the  company  to  the  pension  fund 
for  their  employees. 

The  balance  thus  ascertained  constitutes  the  net  income  of  the 
enterprise.  The  average  of  these  Jiet  sums  for  three  years  is  taken 
as  the  net  annual  taxable  income  of  the  enterprise.  From  this 
the  franchise  taxes  {Enoerhsteaer)  are  deducted.  Upon  the  residue 
an  income  tax  of  five  per  cent,  is  fixed  as  the  regular  tax  for  the 
next  tax  period  of  three  years. 

The  taxes  above  mentioned  are  the  regular  legal  rates,  the  ordi- 
narium.  But  in  late  years  the  necessities  of  the  treasury  have 
increased.  The  annual  finance  law  now  establishes  the  additional 
levy  to  be  made  on  this  property ;  so  that,  in  fact,  the  present 
taxes  are  the  double  of  the  ordinarium,  on  income  and  franchise  ; 
that  is  to  say,  amount  to  10  per  cent,  on  the  net  income,  and  in  the 
case  of  the  higher  franchise  to  3,150  florins  (Erwerbsteuer). 

N.  B.     The  foregoing  system  is  applied  to  the  established  and 
prosperous  roads.     Exceptions  are  made  by  law  in  favor  of  young 


14 


and  unprofitable  enterprises,  which  are  sometimes  relieved  from 
some  of  these  burdens  by  special  enactments.         *  *  * 

*  I  have,  etc., 

John  A.  Kasson. 

BRITISH    AMERICA. 

St.  Thomas,  Ont.,  March  17,  1879. 
C.  F.  Adams,  Jr.,  Esq.,  Boston,  Mass.: 

Sir  :  In  the  first  place,  I  beg  leave  to  state  that  the  taxation 
of  railroads,  railroad  property,  securities  and  personalty  is  at  what 
might  be  called  its  minimum  in  Canada,  and  complaints  of  rail- 
way corporations  of  excessive  taxation  are  of  rare  occurrence. 

•In  every  case  where  an  over-assessment  occurs,  there  is  a 
municipal  court  of  revision  to  which  appeal  may  be  made,  and,  if 
such  appeal  be  overruled  therein,  application  for  relief  may  be 
made  to  the  county  court  judge  of  the  county  in  which  the  tax  is 
levied,  who  is  empowered  to  examine  on  oath  all  parties  interested ; 
and  after  hearing  evidence  as  to  value,  his  decision  as  to  the  proper 
assessment  shall  be  final. 

The  ra'lway  interests  of  the  country  are  zealously  protected  by 
the  legislature. 

In  reply  to  your  questions,  I  shall  answer  them  seriatim. 

First  Question.  — '^  Upon  what  general  recognized  principle,  if 
any,  is  the  railway  taxation  of  the  state  in  question  based?  " 

Answer. —  There  are  no  definite  rules  relating  to  taxation,  ex- 
cept those  laid  down  in  the  Assessment  of  Property  Act  of  the  Prov- 
ince oj  Ontario,  32  Yicioria,  Chapter  36.  Section  7  of  this  act 
reads  as  follows: 

"  The  real  estate  of  all  railway  companies  is  to  be  considered 
as  lands  of  residents,  although  the  company  may  not  have  an 
office  in  the  municipality,  except  in  cases  where  a  company  ceases 
to  exercise  its  corporate  powers  through  insolvency  or  otherwise." 

And  section  33  reads  : 

"  Every  railway  company  shall  annually  transmit  on  or  before 
the  first  day  of  February,  to  the  clerk  of  every  municipality  in 
which  any  part  of  the  roadway  or  other  real  property  of  the 
company  is  situated,  a  statement    showing,   first,  the  quantity 


15 

of  land  occupied  by  the  roadway,  and  the  actual  value  thereof, 
according  to  the  average  value  of  land  in  the  locality,  as  rated  on 
the  assessment  roll  of  the  previous  year;  secondly,  the  real  prop- 
erty, other  than  the  roadway,  in  actual  use  and  03cupation  by  the 
company,  and  its  value  ;  and  thirdly,  the  vacant  land  not  in  actual 
use  by  the  company,  and  the  value  thereof,  as  if  held  for  farm- 
ing or  gardening  purposes  ;  and  the  clerk  of  the  municipality  shall 
communicate  such  statement  to  the  assessor,  who  shall  deliver  at, 
or  transmit  by  post,  to  any  station  or  office  of  the  company,  a 
notice  addressed  to  the  company  of  the  total  amount  at  which  he 
has  assessed  the  real  i:>voperty  of  the  company  in  his  municipality 
or  ward,  showing  the  amount  for  each  description  of  property 
mentioned  in  the  above  statement  of  the  company." 

Second  Quastion.— "  In  how  far  are  the  corporations  taxed  as 
holders  of  realty  ?" 

Answer.—  Real  estate  consist?,  under  the  act,  of  the  right  of 
way  and  other  lands  acquired  by  the  corporation  for  station 
grounds,  shops  and  borrow-pits,  and  any  lands  requisite  for  the 
use  and  convenience  of  the  railway  proper.  These  lands  are 
taxed  pro  rata  with  those  adjoining,  both  in  town  and  country,  the 
assessor  basing  his  estimate  of  value  on  the  land  itself,  irrespective 
of  the  improvements  on  adjoining  property. 

Superstructure,  excepting  buildings,  is  exempt  from  taxation; 
as  are  also  rolling  stock,  engines,  machinery,  rails,  sleepers,  etc., 
etc.,  etc. 

I  may  here  add,  that  it  is  provided  by  Act  of  Parliament  that 
municipalities  may,  at  their  discretion,  exempt  railway  properly 
from  taxaiion  of  every  kind.  This  is  accomplished  by  a  simple 
resolution  in  the  municipal  council  of  the  town  or  township  in 
which  the  property  in  question  is  situated. 

Third  Question. —  '' In  how  far  as  holders  of  personalty?" 

Answer. — Personalty  is  not  ratable. 

Fourth  Question.  — "  In  how  far  are  they  subject  to  franchise 
tax  ?" 

Answer.  —  There  is  no  franchise  tax. 

Fifth  Question.  —  "  In  how  far  is  their  stock  taxed  as  personalty 
to  the  owners  thereof  ?" 

Answer.  —  Their  stock  is  not  taxed,  being  exempted  by  clause 


16 


17,  section  9,  Assessment  Act  of  Ontario,  32  Victoria,  Chapter  86, 
which  reads  as  follows : 

'■'■Exemptions.  — The  stock  held  by  any  person  in  any  railway 
company." 

S-ixth  Question.  —  "  What  taxes  are  levied  on  the  receipts  of  the 
company,  whether  gross  or  net?" 

Answer.  — No  taxes  are  levied  on  the  receipts  of  the  company. 

Seventh  Question.  —  "Where  and  how  is  rolling  stock  taxed  ?" 

Answer. — Rolling  stock  is  not  taxed. 

Eighth  Question.  —  "  How  are  the  local  taxes  levied?" 

Answer.  — Each  municipality  and  school-section  collects  its  own 
taxes.  County  and  township  rates  and  statutory  road  labor  are 
payable  to  the  collector  or  township  clerk,  according  to  con- 
venience. If  paid  to  the  latter,  he  remits  the  county  rates  to  the 
treasurer  of  the  county. 

Ninth  Question.  —  "What  process  of  appeal  is  provided  in  cases 
of  excessive  assessment?" 

Answer. —  Court  of  revision,  composed  of  members  of  the  mu- 
nicipal council,  and  a  further  appeal  to  the  judge  of  the  county 
court. 

I  have  the  honor  to  be,  sir, 

Very  respectfully  your  obedient  servant, 

R  F.  Harris, 
Claim  Agent  Canada  Southern  Railway. 

BELGIUM. 

Legation  of  the   United  St  lies, ) 
Brussels,  May  7,  1879.      ) 

Sir:  *  *  *  Referring  to  your  No.  31,  asking  for  par- 
ticulars of  railroad  taxation  in  Belgium.       *       *       * 

The  minister  now  proceeds  to  answer  in  detail  the  questions 
propounded.  1st  and  6th.  "  On  what  generally  recognized  prin- 
ciple, if  any,  is  the  taxation  of  the  railroads  in  Belgium  based  ?  " 
*'What  taxes  are  levied  upon  the  receipts  of  the  companies, 
whether  net  or  gross?  " 

The  first  article  of  the  law  of  the  21st  of  May,  1819,  upon  the 
license  duty,  sanctions  the  following  principle:  No  one  can  prac- 
tice for  himself,  or  any  one  in  another's  name,  without  having  a 


17 


license.  An  industry,  or  trade  or  shop  is  not  exempted  by 
Article  3  of  this  law.  The  license  is  based  upon  the  propor- 
tionate amount  of  profit  which  each  industry  may  realize,  taking 
into  account  its  usefulness,  more  or  less  great. 

The  workers  of  railroads  are  not  by  name  indicated  in  the  law 
of  license  duties.  However,  they  are  taxed  by  assimilation  with 
contractors  for  transports. 

The  minimum  duty  is  six  francs,  the  maximum  is  425  francs, 
in  principal.  The  state  collects  besides  20  additional  centimes 
upon  this  duty.  The  provinces  and  the  parishes  are  authorized 
to  add  also  some  additional  centimes,  of  which  the  amount  varies 
according  to  their  budget  necessities. 

Such  is  the  system  of  imposing  the  license  duty  on  railroad 
workers,  in  so  far  as  they  are  not  constituted  into  joint  stock  com- 
panies or  into  companies  with  limited  liability  by  shares. 

But  in  Belgium,  the  grantee  railroad  companies,  all  having  a 
joint  stock  form,  are  taxed  exclusively  upon  the  annual  profits. 

It  is  understood  by  profits  the  interest  of  capital  employed, 
the  dividends,  and  generally  all  amounts  divided  in  any  titles 
whatsoever,  including  those  which  are  affected  by  the  increase  of 
the  social  capital,  and  the  reserve  fund. 

The  duty  is  two  per  cent,  upon  these  profits,  independently  of 
twenty  additional  centimes. 

jSTo  taxation  is  due,  when  the  joint-stock  company  closes  its 
balance  with  a  loss. 

Second  Question. — "  In  how  far  are  railroads  taxed,  as  holders 
of  realty?" 

The  land  necessary  for  the  construction  of  conceded  railroads 
for  a  service  of  public  usefulness  being  acquired  in  the  name  of 
the  state,  which  is  the  proprietor,  the  companies  are  only  usufruc- 
tuaries until  the  expiration  of  their  grants  of  railroads. 

The  surface  of  land  occupied  by  the  railroads,  being  assimi- 
lated to  the  highways,  is  exempt  from  land  tax. 

The  buildings  wtiich  are  inherent  to  the  works  are  also  exoner- 
ated from  taxation,  to  wit :  the  squares  and  stations,  warehouses, 
workshops,   guard-houses,    and    buildings  usel  for  lodgings  for 
station-masters. 
2 


18 

Tn  short,  the  only  landed  property  on  which  the  land  tax  is  ex- 
acted is  the  surplus  land,  etc.,  which  remains  the  property  of  the 
grantees  outside  of  the  railway. 

Third  Question. — "  In  how  far  as  holders  of  personalty  ?  " 
In  Belgium  there  is,  properly  speaking,  no  tax  upon  personalty. 
However,  the  assessed  taxes  include  a  tax  upon  the  furniture  of 
habitations. 

The  law  which  rules  this  tax  is  applicable  to  railroad  companies, 
as  to  all  private  persons,  excepting  for  the  furniture  of  offices  and 
buildings  which  serve  exclusively  for  the  working. 

Fourth  Question.—  "  In  how  far  are  they  subject  to  a  franchise 
tax?" 

Such  a  tax  does  not  exist  in  Belgium. 

Fifth  Question. —  "  In  how  far  is  their  stock  taxed  as  personalty 
to  its  owners  ?" 

The  stock  and  bonds  of  railroad  companies  are  not  subject  to 
any  such  special  tax,  but  these  "  titles  "  [securities]  fall  under  the 
general  application  of  articles  1  and  2.  No.  2  of  the  stamp  law  of 
the  21stot  March,  1839,  is  thus  worded : 

"  The  stamp  duty  upon  stocks  and  bonds,  and  all  other  deeds 
for  unlimited  periods,  ia  payable  after  five  years  of  their  issue.  It 
is  fixed  for  those  of  500  francs  and  under  at  fr.  0.50,  for  those 
above  1,000  francs  to  2,000  francs  at  fr.  2.00,  and  so  on  at  fr.  1.00 
per  1,000  francs  without  fractions." 

Article  10  of  the  law  of  the  2^th  of  March,  1873,  exempts  the 
registering  of  shares  issued  by  companies  ivhose  business  is  estab- 
lished in  the  Kingdom.     *****     ^ 
Very  respectfully, 

Your  obedient  servant, 

WM.  CASSINO  GOODLOYK 

great  britain. 

Inland  Ekvenue,  Somerset  House,  W.  C. 

March  27,  1879. 

May  it  please  your  Lordships  : 

We  have  the  honor  to  return  the  papers  referred  to  us  by  your 
lordships  on  the  iSth  instant,  wherein  the  minister  of  the  United 
States  seeks  information  as  to  the  taxation  of  railways  in  this 


19 

country  ;  and  we  beg  to  submit  the  following  replies  to  the  ques- 
tions put,  as  we  understand  them : 

1.  The  taxation  of  railroads  in  Great  Britain  appears  to  have 
been  based  on  the  previous  taxa'ion  of  stage  carriages,  which  had 
been  in  existence  from  the  year  1779.  The  railroad  tax  does  not 
extend  to  Ireland.  When  the  tax  was  first  imposed,  in  1832,  the 
charge  was  one  half  penny  per  mile  for  every  four  passengers,  the 
proprietors  being  required  to  keep  accounts  and  pay  duty  monthly. 
The  development  of  railway  traveling  soon  rendered  necessary 
a  simple  mode  of  assessing  the  duty,  and,  in  1842,  the  charge 
was  made  five  per  cent  on  the  gross  receipts  from  all  passengera 

In  1844  a  concession  was  made  on  behalf  of  the  poorer  class 
of  travelers,  and  all  fares  not  exceeding  a  penny  per  mile  by 
trains  stopping  at  every  station  were  allowed  exemption  from 
duty. 

The  duty  on  stage  carriages  was  repealed  in  1869,  but  railroads 
having  now  obtained  a  practical  monopoly  in  conveying  pas- 
sengers, and  the  tax  having  become  an  important  branch  of  reve- 
nue, it  is  still  maintained. 

2  and  3.  Railways  are  only  subject  to  the  usual  stamp  duties 
in  dealing  either  with  real  or  personal  property. 

4.  A  franchise  tax  is  not  known  in  this  country, 

5.  Railroad  stock  or  debentures  bear  no  tax  as  such. 

6.  Railroad  proprietors,  like  other  trading  persons  or  companies, 
are  liable  to  income  tax  on  their  net  annual  profits,  and  such  tax 
is  paid  before  any  dividend  is  paid. 

We  have,  etc., 

C.  J.  Herries, 

Algernon  West, 
w.  s.  northcote. 
To  the  Lords  Commissioners  of  Her  Majesty's  Tieasury. 

FRANCE. 

[Translation.~\ 

Paris,  August  30,  1879. 
General  :     In  your  letter  of  March  4  last,  you  requested  de- 
tailed information  in  regard  to  the  system  of  taxation  applicable 
to  French  railroads. 


20 

The  three  following  notes  from  the  different  bureaus  having 
this  matter  in  charge  contain  the  information  called  for  in  the 
questions  submitted  by  jou. 

Accept  the  assurances,  etc., 

(Signed)  Waddington. 

General  Noyes,  Envoy  Extraordinary,  etc. 

BUREAU   OF   LANDS  AND   STAMPS. 

So  far  as  the  Bareau  of  Land  and  Stamps  are  concerned,  the 
railway  companies  are  subject  to  the  following  imposts: 

I.  Railway  concessions  to  private  companies  are  subject  simply 
to  the  regular  registration  duty,  all  the  ofiTiaial  tariffs  contiining 
a  formal  clause  to  that  effect.  The  sale  of  a  concession  to  a  third 
party,  however,  is  subject  to  the  impost  of  2  per  cent,  on  all  sales 
of  personal  property. 

II.  Deeds  of  conveyance  of  real  estate  necessary  to  the  con- 
struction of  railroads  are  examined  for  the  stamp  and  registered 
without  any  charges  whenever  the  land  is  taken  directly  from  the 
government,  or  whenever,  as  is  usually  the  case,  it  is  taken  for  a 
private  company  under  the  law  of  May  3,  1861,  for  public  uses. 

The  assignment  or  awards  for  construction  or  equipment  ap- 
proved for  railroads  not  chartered  and  not  operated  are  subject 
only  to  the  regular  fixed  duty. 

The  similar  assignments  or  awards  in  the  case  of  chartered 
roads  are  subject  to  the  ordinary  imposts.  They  accordingly  are 
charged  1  or  2  per  cent,  on  their  capital,  as  the  case  may  be, 
depending  on  whether  they  are  or  are  not  conversances  of  per- 
sonal property ;  unless  the  case  falls  under  the  laws  of  June  11, 
1859,  permitting  the  provisional  registration  at  a  fixed  charge  of 
contracts  of  a  purely  commercial  character. 
'  III.  As  respects  their  operation,  railways  are  likewise  subject 
to  the  regular  impost.  Accordingly  tickets  and  baggage  slips  are 
subject,  like  individual  receipts,  to  the  stamp  duty  of  10  centimes 
(two  cents)  where  the  sum  paid  exceeds  10  francs  ($2). 

IV.  The  stock  and  bonds  of  railway  companies  are  subject  to 
the  same  imposts  as  those  of  other  companies,  to  wit :  A  stamp 
duty  which  is  fixed  for  stock  certificates  at  50  centimes  (10  cents) 


21 

or  one  fraac  (20  cents)  according  to  the  duration  of  the  company's 
charter,  and  at  one  per  cent,  iii variably  in  the  case  of  bonds. 
This  duty  may  be  converted  by  legislation  into  an  annual  tax  of 
one  twentieth  of  one  per  cent 

The  certificates  of  stock  and  the  bonds  are  further  subject  to  a 
transfer  tax  of  50  centimes  (10  cents),  or,  in  the  case  of  certifi- 
cates payable  to  bearer,  a  regular  annual  tax  of  20  centimes 
(five  cents). 

Finally,  the  stock,  bonds  and  notes  of  railway  companies  are 
charged  with  a  tax  of  three  per  cent,  on  their  dividends  or  interest 

paid  on  them. 
Y      *       *       * 

YI.  Kail  roads  operated  by  the  state,  so  far  as  imports  are  con- 
cerned, are  subject  to  the  same  taxes  and  contributions  of  every 
description  as  private  railways. 

Bureau  of  Direct  Taxation. 

The  first  three  questions  alone  affect  the  Bureau  of  Direct  Tax- 
ation. 

1st.  "  On  what  principle,  if  any,  is  the  taxation  of  railroads 
based  ?  " 

Eailways  are  subject  to  severe  direct  tMxes,  and  share  in  their 
degree  in  the  public  burdens,  according  to  their  estimated  reve- 
nues, in  conformity  with  the  principle  of  proportions,  which  is  the 
fundamental  idea  of  direct  taxation  in  France. 

21.  "  In  what  degree  are  the  companies  taxed  as  holders  of  real 
estate  ?  " 

The  companies  are  subject  to  the  land  tax —  a  tax  imposed  on 
unimproved  real  estate  in  proportion  to  the  net  revenue  derived 
from  it.  The  right  of  way  is  assessed  on  the  same  basis  as  the 
best  arable  land  of  the  town  in  which  it  is  situated.  The  stations, 
buildings,  etc.,  are  assessed  on  the  same  basis  as  other  improved 
property  in  the  same  town. 

The  companies  further  pay  a  tax,  similar  in  character  to  the 
legacy  tax,  of  0.25  per  cent,  on  all  real  estate  held  by  them,  which 
is  neither  included  in  their  right  of  way  nor  used  in  their  business 
as  common  carriers. 

The  companies  further  pay  the  window  and  door  taxes  on  all 


n 


baildiQgs  occiipiel  by  themselves  or  their  employes.     *       *       * 

3d.  "  Wnat  license  tax  do  they  pay?  " 

Each  company  is  assessed  at  a  fixed  charge  of  240  francs  ($48) 
primarily,  over  and  above  a  gradaated  tax  of  2i  francs  ($i.  80) 
for  each  myridmeter  (6  miles),  and  a  proportional  duty  estimated 
on  the  basis  of  a  twentieth  of  the  local  valuation  of  the  dwell- 
ings and  offices  and  of  a  fortieth  of  the  buildings  of  the  company, 
necessary  to  the  regular  operation  of  its  road.  Certain  permitted 
looal  taxation  is  additional  to  the  above. 

The  state  is  subject  to  the  same  piyments  as  private  companies. 

Bureau  of  Indirect  Taxation. 

The  first  and  sixth  questions  above  relate  to  the  Bureau  of  In- 
direct Taxation. 

The  law  of  Ojtobar  I,  1798,  fixed  in  a  general  way  an  indirect 
tax  on  all  conveyances,  whether  by  land  or  water,  proportioned  to 
the  fare  paid  by  the  traveler.  Tae  law  of  February  24, 1805,  has 
extended  this  tax  to  the  land  carriage  of  merchandise.  These 
laws,  though  established  prior  to  the  inventioa  of  railways,  have 
been  construed  as  applicable  to  them.  Later  the  railways  have 
been  specially  designated  in  the  laws  of  1855  and  1871. 

Under  the  laws  of  1798  and  1805,  the  indirect  tax  amounted  to 
10  centimes  (two  cents)  for  each  traveler  and  the  same  amount  for 
the  carriage  of  all  merchandise.  A  law  of  1799  added  to  this  as 
a  war  tax  an  additional  tenth.  The  law  of  1855  added  a  second 
tenth,  which  increased  the  tax  to  12  per  cent.  Finally  the  law  of 
1871  fixed  a  further  tax  of  10  per  cent,  on  the  fares  of  railway 
and  steamboat  passengers,  as  well  as  on  the  charges  for  the  car- 
riage; of  baggage  and  express  matter,  by  the  same  means  of  con- 
veyance. Men  while,  this  law  does  not  aff  jct  any  charge  less  than 
fifty  centimes. 

The  principle  which  has  prevailed  in  establishing  the  taxes  on 
railways  is  that  this  tax  ought  not  to  affect  the  official  tariff  fares, 
and  the  total  thus  forms  the  sum  paid  by  the  traveler.  Of  this 
total  the  companies  retain  the  regular  tariff  fare  and  pay  over  to 
the  government,  whose  agents  for  this  purpose  they  become,  the  tax 
they  have  collected  on  its  account. 


To  sum  up,  on  a  net  receipt  of  100  francs,  ciUected  by  the  rail- 
road companies  on  their  own  account,  and  made  up  of  fares  of  50 
centimes  (10  cents)  or  more,  the  additional  imposts  on  acoount  of 
the  government  and  the  total  sum  taken  from  the  public  are  as 
follows : 

Net  receipt  from  regular  tariff  fares 100. OOf.  =  $30.00 

Old  imposts  (Laws  1798  and  1805) : 

Principal 10 .  OOf. 

Two-tenths 2.00=  12.00     =      2.40 

Additional  tax  (Law  1871) 11.20  11.20     =      2.24 

Total  tax 23.20f.  =  |4.80 

Total  sum  paid  by  public 123. 20f.  =  $24.64 

Where  the  fare  is  less  than  50  centimes  (10  cents),  the  addi- 
tional tax  fixed  by  the  law  of  1871  is  not  levied.  The  figures 
then  stand  as  follows: 

Net  receipts  from  regular  tariff  fares  not  exceeding  50  cen- 
times    lOOf. 

Old  taxes  (Laws  1798  and  1805)  |    Ten°hs^*^ ."  *  * '  '^2^  1  ^^^-  ^^ 

Totaltaxes 12f.    or    112f. 

taken  from  the  public. 

The  tax  actually  collected  by  the  Bureau  of  Indirect  Taxation 
on  carriage  by  railways  amounts  therefore  to  23.5  per  cent,  of  the 
net  receipts,  and  to  18.83  per  cent  of  the  gross  receipts  on  fares  of 
•50  centimes  (10  cents)  or  more,  and  of  12  per  cent,  of  the  net  re- 
ceipts of  10.71  per  cent,  of  the  gross  receipts  for  fares  less  than 
50  centimes  (10  cents). 

The  calculation  is  based  not  on  the  carrying  capacity  but  on 
the  actual  receipts  of  the  companies  from  passengers  and  merchan- 
dise carried.  It  is  payable  every  ten  days,  and  is  ascertained  at 
the  expiration  of  each  tenth  day  from  an  inspection  of  the  com- 
panies' registers  by  a  superior  official  of  the  treasury. 

The  above  described  tariffs  are  applicable  to  the  great  railroad 
companies  which  carry  on  an  extended  traffic.  But  the  merely 
local  roads,  the  service  of  which  is  confined  to  the  interior  of  cer- 
tain large  cities  or  within  narrow  limits  about  these  cities,  have 
the  power,  if  they  find  the  proportional  impost  as  above  calculated 
too  onerous,  to  demand  the  privilege  conceded  by  a  law  of  1833 , 
modified  by  a  law  of  1839,  under  which  a  fixed  impost  is  substi- 
tuted for  the  proportionate  impost  in  certain  prescribed  cases. 


24 


Under  this  law  the  following  taxes  are  prices  on  carriages  of 

lto2  seats SO.OOf.  =  110.00  per  annum. 

3  "      75.00    —    15.00 

4  "      100.00    =    20.00 

5  "      120.00    =    24.00 

6  "      137.50    =    27.40         " 

Above  6  cents,  for  each  additional  seat  with 

less  than  50  seats  in  all 12.50   =  2.50  " 

For  each  seat  above  50  and  less  than   150  in- 
clusive   6.25    =  1.25  " 

Ppr  each  seat  above  150  seats 6.121—  0.625  " 

The  imposts  thus  fixed  are  collectible  monthly  in  adv^noe.  A 
law  of  the  21st  of  March,  1871,  imposed  an  extraordinary  and 
temporary  tax  of  5  per  cent  on  the  cost  of  carriage  of  all  goods 
sent  by  regular  freight  trains.  This  tax  has  been  deemed  ob- 
structive to  industrial  development  and  abandoned  from  the  1st 
of  July,  1878. 

It  may  be  interesting  to  know  the  result  of  the  indirect  taxation 
of  railways  in  Franca  They  are  given  below  for  the  years  1875, 
1876,  1877,  1878 : 


Indirect. 


1875 
1876 

1877 
1878 


55,566,210 
57,902,008 
57,457,166 
67,143,357 


Direct. 


13,495,783 
13.994,242 
14,045,332 
14, 065, 643 


Total. 


69,061,992  =$13,808,398 
71,896,250  =  14,379,230 
71,502,488  =14,300,293 
81,209,000  =  16,241,800 


During  the  four  years  in  which  it  was  in  operation  (March,  1874, 
to  July,  1878),  the  5  per  cent  tax  on  transportation  of  merchan- 
dise in  regular  trains  returned  on  the  average  from  23,000,000  to 
24,000,000  francs,  annually. 

GERMANY. 

Berlin,  April  28,  1879. 

The  undersigned  has  the  honor  to  srate,  in  reply  to  the  re- 
spected note  of  Mr.  H.  Sidney  Sverett,  Charged''  Affaires  of  the 
United  States  of  America,  that  the  taxation  of  railroads  and  rail- 
road bonds  has  as  yet  not  been  uniformly  regulated  in  Grermany, 
but  that,  on  the  contrary,  it  varies  in  the  different  German  states. 

Since,  of  all  the  states  in  question,  Prussia  alone  possesses 
private  railroads  of  considerable  extent,  the  undersigned,  in  trans- 


25 

mitting  the  desired  informadon,  thought  proper  to  confine  himself 
to  the  regulations  in  force  in  Prussia. 

A  more  detailed  review  of  the  above  will  be  found  in   the 
memorial  inclosed  and  respectfully  placed  at  the  disposal  of  Mr. 
Everett  by  the  undersigned,  who  also  takes  this  occasion,  etc 
(Signed)  Von  Bulow. 

To  the  Charge  d'  Affaires  of  the  United  States  of  America, 
n.  Sidney  Everett. 

Memorial  concerning  the  Taxation  of  Railroads  in  Southern  Prussia. 

I.  State  Taxes. —  It  was  already  prescribed  by  law  of  November 
3,  1838,  concerning  railroad  enterprises  (§  88),  that  railroads  were 
to  pay  a  tax,  the  regulation  of  which  was,  however,  reserved  for 
a  later  period. 

The  law  at  the  same  time  provided  "  tlmt  railroad  companies 
should  remain  free  from  license    taxes    (Gerwerbesteuer)."     §  38. 

The  introduction  of  the  tax  provided  for,  ensued  through  the 
law  of  May  30,  1853,  concerning  the  tax  to  be  paid  by  railroads. 
Pursuant  to  the  same,  railroads  are  required  to  pay  to  the  state  a 
percentage  of  their  annual  net  receipts. 

Oq  March  16,  1867,  a  law  was  passed  concerning  the  taxation 
of  all  railroads  not  owned  by  the  state,  or  by  home  stock  com- 
panies, the  provisions  of  which  are  in  union  with  those  of  May 
80,  1853. 

Eailroad  bonds  are  not  taxed  as  such  by  the  state,  but  are  sub- 
ject, like  all  other  evidences  of  indebtedness,  to  a  single  stamp 
tax,  the  proceeds  of  which  flow  into  the  treasury. 

n.  Other  than  State  Taxes. —  The  question  as  to  whether  and 
to  what  extent  railroads  and  railroad  bonds  may  be  taxed  by 
municipalities,  circuits  and  other  communal  associations,  is  not 
settled  in  Prussia  by  any  legislative  provisions. 

The  answer  to  this  question  depends  rather,  as  railroads  belong 
either  to  the  state  or  to  stock  companies,  upon  the  provisions 

which  obtain  as  regards  communal  taxation  of  the  fisc ■ 

and  of  stock  companies,  which  are  different  in  different  parts  of 
the  country. 

To  the  six  questions  contained  in  the  esteemed  note  of  the  3d 


26 

•ult.,  an  answer  applying  uniformly  to  the  whole  state  can  only  be 
given  with  reference  to  the  following  points  : 

In  so  far  as  the  realty  of  railroads  is  subject  to  the  state  realty 
or  building-3  tax,  which  is  not  the  case  as  regards  the  roadbeds, 
the  same  are  required  to  pay  the  taxes  on  realty  imposed  on  the 
municipal  and  other  communal  associations,  in  particular  with 
additions  to  the  state  realty  aod  buildings  tax. 

As,  in  Prussia,  municipal  and  circuit  taxes  are  nowhere  levied 
in  the  form  of  a  property  tax,  there  is  no  distinct  taxation  of 
railroads  as  owners  of  personalty. 

Eailroads  are  only  entitled  to  immunity  from  taxation  as  re- 
gards roadbeds  in  so  far  as  it  is  a  question  of  the  levying  of  com- 
munal real  estate  taxes. 

The  stock  belonging,  as  well  as  the  dividends  accruing,  to  hold- 
ers are  everywhere  subject  as  their  personalty  to  the  income  tax 
of  municipalities,  circuits,  etc.  The  right  of  deduction  is  also 
not  at  present  conceded  to  holders  in  those  municipalities  in  which 
a  railroad  as  such  is  subjected  to  an  income  tax. 

The  interest  accruing  to  owners  of  railroad  bonds  is  taxed  as 
their  personal  property  in  the  same  manner  as  the  dividends  of 
stockholders.  A  tax  upon  the  bonds  as  such  is  nowhere  im- 
posed. 

Communal  and  district  taxes  are  nowhere  imposed  on  gross  re- 
ceipts. In  cases  in  which  income  taxation  is  imposed  on  railroada 
at  all,  the  net  receipts  alone  are  regarded  as  subject  to  taxation. 
The  surplus  of  the  annual  revenue  over  and  above  the  annual 
expenditure,  is  considered  the  net  receipts ;  as  expenditures  are 
regarded  also  the  customary  annual  loss  b\''  use  of  buildings, 
■utensils,  etc.;  further,  the  necessary  addition  to  the  renewal  fund, 
as  well  as  the  amounts  expended  to  pay  interest  on  debts,  and 
commissions  to  officers,  and  members  of  the  supervision  and  min- 
isterial councils ;  but  not  the  amounts  added  to  the  capital 
ifcserve  fund,  or  used  for  improvements  to  or  enlargements  of 
buildings. 

Such  taxation  of  the  net  receipts  of  railroads,  however,  only 
takes  place  on  the  basis  of  the  special  provisions  contained  in  the 
regulations  of  the  respective  city  and  rural  communities,  in  the 
city  communities  of  the  provinces  of  East  and  West  Prussia, 


a? 

Brandenberg,  Pommerania,  Silesia,  Saxony,  Slevic,  Holsatia, 
Westphalia  and  Rliineland,  in  the  city  of  Frankfort  on-Main  ;  and 
as  regards  private  railways,  in  the  city  communities  of  the  pro- 
vince of  Hanover,  then  in  the  rural  communities  of  the  provinces 
of  Westphalia  and  Rhineland,  and  further  on  the  basis  of  §  14 
of  the  circuit  regulations  of  Dacember  13,  1872,  as  regards  the 
private  railroads  in  the  circuits  in  the  provinces  East  and  West 
Prussia,  Brandenberg,  Pommerania,  Silesia  and  Saxony. 

As  entitled  to  tax  are  regarded  only  those  communities  and  cir- 
cuits in  which  there  is  a  station  ;  and  not  those  communities 
through  which  the  road  mere^  lies. 

The  apportionment  of  the  entire  net  receipts  of  the  railroad 
among  the  individual  communities  and  circuits  entitled  to  tax  is 
based  on  the  proportion  of  the  gross  receipts  of  the  individual 
stations  (internal  business)  to  the  entire  gross  receipts. 

HOLLAND. 

[Translation  of  Memorandum  from  the  office  of  Minister  of 
Finance.] 

There  are  no  special  taxes  on  railway  works ;  the  railway  com- 
panies are  subjected  to  the  same  rates  as  other  companies,  except 
that  the  grants  for  the  right-of-way,  and  an  act  of  9th  of  April, 
1875,  regulating  the  operating  of  railways  by  private  companies 
stipulate  some  immunities  in  favor  of  the  realm,  viz: 

1.  Transport  of  soldiers  and  munitions,  including  horses,  for 
half  pay. 

2.  Free  passage  to  policemen  traveling  on  duty. 

8.  Free  passage  to  people  traveling  under  direction  of  the  pub- 
lic authority. 

4.  Free  passage  to  the  mail. 

5.  Free  passage  to  custom-house  officers  traveling  on  duty. 

6.  Offices  free  of  rental  for  custom-house  officials,  and  suffi- 
cient space  for  the  erection  of  government  buildings,  for  the 
state  telegraph. 

Answers  to  the  six  queries : 

1.  As  above  stated,  there  are  no  special  railway  taxes. 

2.  The  railway  companies  pay  for  the  ground  they  hold, 
the   same  rate  of  tax  on  realty  as  was  paid  for  it  before  said 


28 

ground  became  its  property;  for  the  buildings  on  the  ground 
the  same  tax  is  paid  as  would  bs  for  other  buildings  of  a  simi- 
lar kind. 

3.  There  is  no  tax  on  personalty,  except  a  tax  named  personal 
rate,  which  is  raised  according  to  six  bases,  viz.:  the  rental,  the 
value  of  the  buildings  occupied,  the  number  of  doors  and  win- 
dows in  the  buildings,  the  number  of  chimneys,  the  market  value 
of  their  furnishings,  the  number  of  domestics  and  horses. 

To  this  tax  railway  companies  are  liable.  Their  warehouses, 
like  the  warehouses  of  other  kinds  of  business,  are  exempt. 

4.  They  are  not  subjected  to  a  tax  on  their  shares  or  capital. 
They  piy  a  license  fee  to  an  amount  of  two  per  cent,  of  their 
dividends,  all  bu5iness  being  liable  for  a  license  tax;  their  em- 
ployes pay  the  same  as  all  other  clerks  in  trade. 

5.  Their  shares  and  bonds  are,  at  their  issue,  and  when  passing 
to  inheritors,  subjectei  to  the  same  stamp  duties  and  taxes  as  all 
other  shares  and  bonds. 

6.  There  is  no  tax  on  their  net  or  gross  receipts. 

HUNGARY. 

Legation  of  the   United  States,  ] 

Vienna,  March  30,  1879.  j 

Sir:  Referring  to  my  dispatch  No.  171,  giving  the  informitioa 
respecting  Austrian  railroad  taxation,  as  desired  by  your  dispatch 
No.  87,  I  now  submit  the  following  report  touching  the  system 
adopted  by  the  government  ot  Hangar//  : 

I.  "On  what  general,  recognized  principle,  if  any,  is  the  rail- 
road taxation  of  Hungary  based  ?  " 

A.  On  the  principle  that  the  transportation,  should  pay  the 
taxes,  these  being  levied  upon  the  passengers,  and  owners  of  the 
property  transported.  The  particulars  appear  in  the  analysis  of 
the  Hungarian  law  here  appended.     (Enclosed  I.) 

II.  "  In  how  far  are  the  railroad  companies  taxed  as  holders  of 
realty  ?  " 

A.  All  the  realty  is  exempt  from  taxation. 

III.  "  In  how  far  as  holders  of  personalty  ?  " 

A.  The  personalty  is  also  exempt  from  taxation. 

IV.  "  In  how  far  are  thej  subject  to  a  franchise  tax  ?  " 


39 

A.  There  is  no  tax  on  the  franohise. 

V.  "In  how    far    is  their  stock   taxed    as    personal ty  to  its 

0   " 

owners  : 
A.  The  shares  are  not  subject  to  taxation. 

VI.  "  What  taxes  are  levied  on  the  receipts  of  the  companies, 
whether  gross  or  net?  " 

A.  There  is  no  tax  upon  either  gross  or  net  receipts  in  Hun- 
gary. 

JBcplanati    on 

With  one  or  two  exceptions,  in  both  Austria  and  Hungary,  the 
plan  was  early  adopted  of  providing  for  the  ultimate  acquisition 
of  the  railroads  by  the  government.     To  this  end  the  concessions 
■were  granted  for  90  years,  with  the  condition  that  at  the  end  of 
that  period  the  whole  franchise  and  property,  with  an  equipment 
equal  to  the  original  amount,  should  revert  absolutely  to  thestate. 
To  save  the  builders  and  owners  from  loss,  a  system  of  amortisa- 
tion was  established,  in  pursuance  of  which  a  certain  portion  of 
the  capital  in  shares  and  bonds  was  to  be  refunded  in  each  year, 
bv  which  the  reimbursement  would  be  completed  in  ninety  j'-ears. 
In  principle  it  is  a  sinking  fund.     In  Hungary  the  government 
guarantees  the  amortisation  fund,  and  an  interest  of  five  per  cent, 
on  capiial  and  bonded  debts,  in  silver;  and  if  the  net   earnings 
are  not  sufficient,  the  deficiency  is  made  good  out  of  the  national 
treasury  —  but   to   be   refunded   if  subsequent  net  receipts   are 
sufficient.     In  point  of  fact,  in  the  aggregate  there   is  each  year 
a  deficiency  of  several  millions  charged  upon  the  State  Treasury 
of  Hungary.     Under  such  circumstances  it  is  evident  that  tares 
upon  the  corporation  would  involve  the  paying  in  of  money  with 
one  hand  only  to  be  paid  back  by  the  other. 

Hence  the  state  levies  its  revenue  upon  passengers  and  freight- 
ers as  a  surtax  upon  the  regular  tariff  charges  of  the  railroads, 
these  latter  being  the  agents  to  collect  it,  and  to  account  to  the 
government 

In  effect  it  is  a  tax  on  the  gross  receipts,  while  in  law  it  is  a  tax 
on  private  business. 

This  explanation,  together  with  the  summary  of  the  legal  pro- 
visions hereto  appended,  will  fully  answer  the  inquiries  so  far  as 
they  relate  to  Hungary. 


30 

Some  further  elucidation  of  the  railroad  system  is  reserved  for 
a  subsequent  dispatch,  when  some  expected  documents  shall  have 
been  received  at  the  Legation,  showing  more  completely  the 
legal  provisions  for  Austrian  railroads. 

I  have  the  honor  to  be,  sir, 

Your  most  obedient  servant, 

John  A.  Kasson. 

RUSSIA. 

Legation  of  the  United  States,  ) 

St.  Petersburg,  Eussia,  March  20,  1879.  j 

To  the  Honorable  W.  M.  Evarts^  Secretary  of  State,  Washington  : 

Sir  :  Referring  to  your  dispatch  No.  39,  addressed  to  Mr» 
Stoughton,  relative  to  methods  of  taxation  as  respects  railroads 
and  railroad  securities  in  use  in  Russia,  1  have  the  honor  to  re- 
port: 

1st.  That  the  railroad  companies  are  free  from  taxation  as  hold- 
ers of  property,  real  or  personal. 

2d.  The  stock  is  free  from  taxation  to  its  owners. 

3d.  On  the  1st  day  of  January,  1879,  the  government  levied  a 
tax  of  25  per  cent  on  all  passenger  tickets  of  the  1st  class,  20 
per  cent  on  2d  class  and  15  per  cent  on  3d  class.  With  the 
above  exception,  there  is  no  direct  tax  on  the  receipts  of  the  com- 
panies, net  or  gross. 

4th.  The  railroad  companies  of  Russia  are  under  the  control 
and  exercise  of  the  government,  and  by  their  respective  statutes 
subject  to  a  general  franchise  tax. 

But  before  the  usual  conditions  of  a  franchise  can  be  satisfac- 
torily stated,  an  explanation  must  be  given  of  the  method  fol- 
lowed to  obtain  it 

The  founders  of  the  company  must,  in  accordance  with  the 
form  instituted  for  that  purpose  in  the  empire,  present  to  the 
minister  of  ways  and  communication  an  outline  of  the  en- 
terprise. 

By  direction  of  the  minister,  the  matter  is  then  intrusted  to  a 
board  of  engineers  belonging  to  the  ministry,  with  instructions  to 
examine  and  report  as  to  the  feasibility  of  the  project,  and  to  pre- 
pare plans  and  estimates  of  construction.     If,  after  examination, 


31 

it  be  deemed  beneficial  to  give  effect  to  the  enterprise,  the  plans 
and  estimates  are  placed  by  the  minister  before  the  committee  of 
ministers  for  their  consideration  and  action,  and,  if  approved,  are 
submitted  for  the  inspection  of  his  majesty  the  emperor. 

After  the  imperial  sanction  has  been  obtained  for  the  organiza- 
tion of  the  company,  the  ministers  of  ways  and  communication 
and  of  finance  elaborate  the  conditions  of  the  concession  and  the 
statutes  of  the  company. 

The  concession,  with  the  statutes  elaborated  and  recommended 
by  the  ministers  of  ways  and  communication  and  of  finance,  is 
submitted  to  the  committee  of  ministers,  and,  if  approved,  is 
presented  for  the  inspection  and  sanction  of  his  majesty  the 
emperor. 

The  concession  usually  defines: 

1st.  The  name,  object  and  extent  of  the  undertaking. 
2d.  The  duty  of  the  founders  of  the  company,  including  the 
amount  of  caution  money  to  be  deposited  by  the  founders  in  a 
government  depo-jitory,  in  order  to  guarantee  the  establishment  of 
the  company  within  a  specified  time. 

The  statutes  of  the  companies  are  the  laws  to  be  observed  by 
the  companies,  and  are  invariably,  after  the  sanction  ot  the  em- 
peror, printed  and  filed  among  the  collection  of  laws  for  the 
empire. 

The  following  appear  to  me  to  be  the  principal  provisions  of  the 
statutes  of  the  various  companies : 

1st  They  fix  the  duration  of  the  franchises,  usually  from  sev- 
enty-five to  eighty  one  years,  at  the  expiration  of  which  period 
the  exclusive  ownership  of  the  entire  line,  with  all  the  real  estate 
and  rolling  stock  of  the  company,  is  vested  in  the  government 
without  any  payment  therefor. 

2d.  They  specify  the  amount  of  the  capital  of  the  company, 
which  is  usually  one-third  in  shares  and  two  thirds  in  bonds. 

3d.  Tbey  define  the  number  and  dimensions  of  the  postal  cars 
to  be  furnished  by  each  company  for  the  gratuitous  transportation 
of  post  officials,  mails,  packages,  etc.,  etc. 

4th.  They  exact  the  gratuitous  use  by  the  government  of  the 
company's  telegraph. 


■  5th.  They  define  the  quantity  of  rails,  rolling  stock,  bridges, 
etc.,  which  must  be  bought  in  Eussia, 

6th.  They  determine  the  percentage  of  reduction,  usually  from 
40  to  75  per  cent  of  the  tariff,  by  which  soldiers  under  arms  are 
to  be  transported. 

7th.  They  determine  the  psrcentage  of  the  net  receipts  to  be 
paid  to  the  reserve  fund  and  as  dividends  to  shareholders. 

8th.  They  concede  to  the  companies,  free  of  cost,  all  govern- 
ment land,  stone  or  other  material  within  certain  specified  limits, 
and  which  ma^  be  required  for  the  legitimate  use  of  the  com- 
pany in  the  construction  or  improvement  of  their  lioes. 

9th.  They  declare  the  property,  shares  and  bonds  of  the  com- 
panies exempt  from  taxation. 

10th.  They  guarantee  to  the  companies  an  annual  net  revenue 
of  (5)  five  per  cent,  on  the  share  and  bonded  capital. 

I  am  trustworthily  informed  that  with  the  exception  of  three 
companies  the  government  pays  annually  to  the  various  companies 
from  1^  to  4  per  cent,  of  this  guarantee. 

The  companies  are  all  under  the  control  of  the  minister  of  ways 
and  communication,  who,  among  other  things,  determines  the 
tariffs  for  passengers  and  freights. 

It  will  be  seen  from  the  statements  here  presented  that  the 
government  takes  away  from  the  founders,  substantially,  the 
control  and  exercise  of  the  roads.  The  above  answers  are  there- 
fore as  complete  as  circumstances  will  admit  of  their  being  made, 
and  I  trust  they  will  be  found  satisfactory. 

I  have  the  honor  to  be,  sir,  your  obedient  servant, 

W.  BL   Edwards. 

SWITZERLAND. 

Mr.  Hammer  to  Mr.  Fish, 

Berne,  March  25, 1879. 

In  answer  to  the  note  of  the  Charge  d'Affaires  of  the  United 
States  of  the  10th  inst,  the  Federal  Council  has  the  honor  to  fur- 
nish him  with  the  following  information  : 

L  The  Swiss  Confederation  does  not  impose  direct  taxes ; 
consequently  the  railway  companies  pay  no  contribution  to  the 
federal  treasury.     On  the  other  hand,  the  companies  are  bound  as 


33 

regards  the  Confederation,  by  virtue  of  Article  19  of  the  law  of 
Dea  23,  1872,  concerning  rail  ways : 

a.  To  carry  free  of  charge  iho  letters  and  parcels,  concerning 
which  the  prerogative  of  the  state  has  reserved  the  right  of  trans- 
portation to  the  postal  administration. 

For  the  other  parcels  {de  messagerie)  expressed,  the  postal  ad- 
rainistrat'oa  pays  to  the  railway  company  a  compensation  calcu- 
lated on  the  basis  of  the  general  express  tariff  {tan'f  general  de 
grande  vitesse)  by  calculating  the  weight  of  the  parcels  for  one 
month,  and,  also,  taking  into  account  the  diminution  of  lhe{pres- 
tations)  contributions  occasioned  the  companies  by  such  transpor- 
tations. If  the  Confed-i^rition  and  the  companies  cannot  agree, 
the  Federal  Tribunal  decides.  The  conductor  attached  to  this 
service  is  carried  fre?. 

h.  To  carry  free  of  chai-gs  the  postal  cars  as  well  as  their  em- 
ployees, and  the  persons  charged  with  the  inspection. 

c.  To  pay  an  annual  tax  oi  concession  of  fl^'ty  francs  for  each 
section  of  one  kilometre  in  operation,  when  the  revenue  of  the 
operating  attains  four  pjr  cent  aft^r  deducting  the  amouijt  for 
lo3s  by  wear  and  tear,  or  that,  assigne  1  to  the  reserve  fund.  la 
the  event  of  this  revena?,  thus  calculated,  attaining  five  per  cent., 
the  tax  of  concession  may  be  raised  to  fr.  100,  and  to  fr.  200,  if 
this  revenue  is  six  per  cenr.  or  over, 

TI.  Moreover,  the  cantons  have  the  right  to  tax  the  railway 
companies  in  conformity  with  their  legislation  respecting  taxation. 
Nevertheless  according  to  ih.e  circumstances,  not  only  have  cer- 
tain companies  obtained  from  the  cantons  a  complete  exemption 
from  taxation,  while  other  railway  enterprises  have  been  called 
on  to  pay  contributions  t)  the  cantons  or  ti  the  communes,  but 
there  exists  such  a  variety  of  provisions  th  it  it  is  not  possible  to 
fix  a  general  principle  applicable  to  the  colleclion  of  the^e  taxes. 

The  Federal  Council  regrets  that  consequently  it  is  impossible 

to  reply  categorically  to  the  questions  specially  presented  by  the 

Charge  d'Atfuires  of  the  United  Stites,  and  it  avails  itself  of  the 

occasion  to  renew  to  him  the  assurances  of  its  high  consideration. 

In  the  name  of  the  Federal  Council, 
The  President  of  the  Confederation,  Hammer. 

The  Chancellor  of  the  Confederation,  Schiess. 


34: 


SUMMARY   OF   LAWS   IN   RELATION   TO    RAILROAD    TAXATION    IN 
FORCE  IN  THE  VARIOUS  STATES  OF  THE  UNION. 

{The  States  are  in  alphabetical  order.] 

ALABAMA. 

Returns  are  made  to  a  state  board  of  the  whole  length  of  track, 
and  of  the  length  in  each  county  and  town  ;  also  of  the  value  of 
the  road  and  of  all  real  estate  used  for  operating  it,  and  of  the 
rolling  stock.  The  board  finds  the  value  of  each  mile  of  road, 
and  notifie-j  the  assessors  of  counties  and  towns  of  the  amount  as- 
sessable by  them,  dep3nding  on  the  number  of  miles  in  their 
limits.  They  add  the  value  of  other  real  estate  and  of  tools  and 
machinery,  and  assess  on  the  aggregate  as  on  the  estate  of  an 
individual. 

The  value  of  real  estate  is  to  b3  assessed  as  if  owned  in  fee 
simple,  without  any  deductions  for  mortgages  or  other  cause.  And 
the  value  of  the  whole  road  is  never  to  be  estimated  as  less  than 
a  principal  sum,  which,  at  8  per  cent.,  would  produce  the  net 
earnings,  meaning  thereby  the  gross  earnings  leis  the  running 
expenses. 

There  is  no  tax  on  receipts  and  none  on  individual  holders  of 
stock.  From  the  state  board  there  is  no  appeal.  The  penalty  for 
not  making  returns  is  double  taxation,  obtained  by  adding  one 
hundred  per  cent,  to  the  assessable  value  as  found. 

ARKANSAS. 

The  county  clerks  of  the  several  counties  through  which  a  rail- 
road runs  are  constituted  a  board  to  annually  "  ascertain  the  value 
of  all  personal  property,  moneys  and  credits  of  such  company, 
and  appraise  the  same  at  its  true  value  in  money." 

They  may  require  detailed  state iients  under  oath,  and  in  ascer- 
taining values,  road-bed,  stations  and  other  realty  necessary  to 
the  daily  running  operations  of  the  road  are  to  be  estimated  as 
personal  property. 

The  value  thus  ascertained  is  then  apportioned  by  this  board 
among  the  several  counties  through  which  the  road  runs,  so  that 
"  to  each  county,  and  to  each  city,  incorporated  village,  township 


35 

and  district,  or  part  thereof  therein,  shall  be  so  apportioned  as 
shall  equalize  the  relative  value  of  the  real  estate,  structures  and 
stationary  personal  property  of  such  company  therein  in  propor- 
tion to  the  whole  value  of  the  real  estate,  structures  and  sta- 
tionary personal  property  of  such  railroad  company  in  this 
state;  and  so  that  the  rolling  stock  of  such  company  shall  be  ap- 
portioned in  the  same  proportion  that  the  length  of  such  road  in 
said  county  bears  to  the  entire  length  thereof  in  all  said  counties 
or  county,  and  to  each  city,  incorporated  village,  township  and 
district,  or  any  part  thereof  therein  interestel,  the  amount  appor- 
tioned to  each  county ;  and  it  is  hereby  made  the  duty  of  the 
county  clerk  to  apportion  the  amount  so  found  for  his  county  to 
the  cities,  in3orporated  villaga^,  township?,  districts  or  parts 
thereof." 

Where  only  a  part  of  a  railroad  is  in  Arkansas,  its  entire  value 
is  appraised  and  divided  in  the  proportion  the  length  of  road  in 
Arkansas  bears  to  it3  entire  length,  and  "  the  principal  sum  for 
the  use  of  the  "  road  in  Arkansas  is  determined  accordingly. 

In  case  of  an  alleged  overvaluation,  an  appeal  lies  tD  the  Board 
of  Railroad  Commissioners,  which  is  authorized  to  reduce  the 
valuation. 

Neither  the  securit'es  of  the  corpjrations  in  the  hands  of  the 
holders  thereof  nor  their  gross  or  net  receipts  are  taxed. 

The  right  to  levy  additional  tax  on  realty  is  in  litigation. 

The  fundamental  principle  is  that  of  a  property  tax  levied  upon 
an  arbitrary  valuation  and  paid  directly  by  the  corporation. 

CALIFORXT  \. 

In  this  stite  before  the  adoption  of  the  new  constitution  (1870), 
only  material  and  visible  property  was  taxed,  excluding  all  fran- 
chises, stocks,  bonds,  etc.     It  was  also  assessed  at  full  cash  value. 

Railroad  corporations  were  taxed  as  holders  of  realty  on  the 
land  occupied  as  right  of  way,  with  the  track  and  all  structures 
thereon  as  a  whole,  at  a  certain  sum  per  mile.  On  land  Bot  used 
as  track,  railroads  were  taxed,  like  other  property  holders,  on  "  the 
cash  value  of  real  estate,"  and  separately  on  the  "  cash  value  of 
improvements"  thereon.  The  personal  property  was  assessed 
wherever  it  was  found,  except  the  rolling  stock,  which  was  as- 


,00 

sessed  in  each  county  through  which  the  road  ran  in  proportion 
to  the  length  of  road  in  each  county.  As  above  stated,  no  tax 
was  laid  on  franchise  or  receipts,  or  on  the  stock  of  individuals. 
The  assessment  of  each  county  was  sent  to  the  board  of  super- 
visors, acting  as  a  board  of  equalization,  hearing  complaints  and 
making  valuations  conform  to  actual  cash  value.  Thence  it  went 
through  the  county  auditor  to  the  state  boar  J  of  equalization,  con- 
sisting of  the  g)vernor  and  two  other  officials,  who  levied  a  suffi- 
cient rate  to  raise  the  amount  directed  by  legislation. 

E'lch  county  board  having  received  the  state  rate,  coUectel  the 
state  tax,  and  both  fixed  the  county  rate  and  collected  it.  Munic- 
ipal authorities  assessed  and  collected  tax3s  on  property  found 
within  each  town  or  city. 

Under  the  new  constitution  the  property  to  be  taxed  includes 
credits,  bonds,  stocks,  dues  and  franchises.  A  state  board  of 
equalization  and  county  boirds  are  provided  for.  The  state 
boird  is  to  assess  the  franchises,  roadway,  roadbed,  rails  and  roll- 
ing stock  of  all  railroads  running  through  more  than  one  county 
at  their  actual  value,  and  apportion  it  to  each  county  and  munici- 
pality in  proportion  to  the  lengt'h  of  road  therein. 

All  other  property  is  assessed  in  the  place  in  which  it  is  situated. 

COLORADO. 

The  state  board  finds  the  value  of  all  property,  real  and  per- 
sonal, used  for  railroad  purposes,  considering  all  the  circumstances 
of  the  road;  and  transmits  to  the  county  board  of  assessment  the 
amount  assessable  by  them  in  proportion  to  the  number  of  miles 
of  main  track  in  each  county. 

CONNECTICUT. 

Railroad  companies  are  assessed  one  per  cent,  on  such  propor- 
tion of  their  stock  and  debt  at  market  value  less  cash  assets  as  the 
length  of  the  road  in  the  state  bears  to  the  whole  length  thereof, 
deducting  the  amount  of  local  taxes  paid  on  land  not  used  for 
railroad  purposes.  The  amount  of  municipal  railroad  bonds,  of 
which  the  avails  have  been  used  for  the  road,  is  included  as  part 
of  the  debt  on  which  taxes  are  assessed. 

This  is  paid  to  the  state  treasurer,  and  is  in  lieu  of  all  taxes  on 
the  property  or  rights  of  the  company. 


si 


Individuals  are  not  taxed  either  on  the  stock  or  securities  of 
the  railroad  company  held  by  them.  No  taxes  are  levied  on  the 
rolling  stock  nor  on  the  receipts.  The  only  local  taxation  is  on 
land  not  used  for  railroad  purposes.  The  state  tax  of  one  (I)  per 
cent  is  assessed  on  the  amount  as  returned  by  the  railroads  and 
as  corrected  hy  the  state  board  of  equalization,  whose  decision 
is  final. 

DELAWARE. 

Eailroad  corporations  are  taxed  on  land  just  as  other  owners  of 
land  are  taxed,  unless  exempt  by  charter.  They  are  not  taxed  on 
personal  property.  Nor  are  they  taxed  on  their  franchise,  unless 
by  charter  provisions.  A  yearly  tax  of  ^  of  1  per  cent,  is  laid  on 
the  actual  cash,  value.  A  tax  is  laid  of  10  per  cent,  on  net 
income,  and  when  the  road  extends  to  other  states,  both  these 
taxes  are  laid  in  proportion  to  the  length  within  Delaware  to  the 
whole  length  of  the  road. 

There  is  also  a  tax  of  10  cents  on  eacli  passenger  carried  wiihin 
the  state.  Such  a  tax,  as  applied  to  persons  brought  into  the 
stale,  or  carried  through  it,  or  out  of  it,  has  been  held  to  be  uncon- 
stitutional by  the  Supreme  Court  of  Delaware  and  of  the  United 
States,  The  law  remains  on  the  statute  book,  and  is  apparently 
enforced  as  to  passengers  only  carried  within  the  state. 

An  annual  tax  was  laid  of  $100  on  each  engine,  $25  on  each 
passenger  car,  and  $10  on  each  freight  car  or  truck  nserZ  during, 
the  year  by  any  railroad  company  incorporated  by  or  doing  busi- 
ness in  the  state.  But  the  act  was  declared  t  >  be  unconstitutional 
by  Justice  Strong,  of  the  Supreme  Court  of  the  United  States, 
and  an  appeal  which  was  taken  was  not  prosecuted. 

The  Philadelphia,  Wilmington  &  Baltimore  Eiilroad  Company 
pays,  by  statute  authority,  a  commutation  of  $13,000,  in  lieu  of 
the  10-cent  tax  on  passengers  ;  and  other  roads  are  permitted  to 
commute  in  like  manner.  All  the  taxes,  except  that  on  land;  are 
state  taxes  laid  on  amount  returneJ  by  the  company  to  the  state 
treasurer,  or  in  case  of  failure  to  return,  computed  by  him.  The 
tax  on  land  is  laid  by  local  officers,  with  an  appeal  to  the  levy 
court. 


3S 


FLORIDA. 


Each  road  returns  to  the  state  comptroller  the  length  and  value 
of  the  road,  including  the  right  of  way  and  rolling  stock.  The 
comptroller  apportions  the  amount  to  each  mile,  and  informs  the 
county  officers,  who  add  to  their  county's  share  the  other  property 
in  said  county,  and  levy  a  tax  on  the  aggregate  as  on  the  property 
of  an  individual, 

GEORGIA. 

When  there  is  no  charter  exemption  confining  taxation  to  one- 
half  percent,  of  net  income,  the  railroad  companies  are  taxed, 
like  individuals,  on  the  value  of  roadbed,  track,  stations,  rolling 
stock  and  all  other  property,  real  and  personal.  The  rate  has 
been  ^  per  cent.  No  tax  is  laid  on  franchiss  or  on  stock  in  the 
hands  of  owners. 

The  question  of  charter  exemption  has  long  been  in  litigation  ; 
and  the  state  has  made  many  attempts  to  evade  the  constitutional 
protection  given  to  roads  by  these  contracts. 

County  taxes  are  levied  at  a  per  cent,  on  the  state  tax  ;  and  on 
the  sime  valuation.  In  case  of  alleged  excess  in  valuation,  the 
parties  select  arbitrators,  who  agree  on  an  umpire. 

ILLINOIS. 

Taxes  are  levied  on  railroad  corporations  as  on  other  corpora- 
tions, and  on  individuals  according  to  the  value  of  their  property. 

The  right  of  way,  all  tra';k^,  stations  and  improvements  on 
the  right  of  way,  are  asse-sed  by  the  siate  board  of  equalization. 

All  other  real  estate  is  assessed  as  the  land  of  individuals  is. 
All  personal  property,  except  rolling  stock,  is  assessed  wherever 
it. is  found  on  May  1.  If  the  value  of  the  capital  stock  exceeds 
the  value  of  the  real  and  personal  estate,  the  increase  is  assessed 
as  capital  stock.  There  is  no  franchise  tax,  and  no  tax  on  stock 
to  the  holders  thereof,  nor  is  there  any  tax  on  receipts.  The 
value  of  rolling  stock  is  fixed  by  the  state  board,  and  distributed 
for  taxition  among  the  counties  and  municipalities,  in  proportion 
to  the  length  of  road  therein. 

The  value  of  right  of  way,  after  being  assessed  by  the  state 
board,  is  d  stributed  in  like  manner,  except  that  side  and  second 


39 

tracks  and  buildings  on  the  right  of  way  are  taxed  where  they  are 
situated. 

There  is  no  appeal  from  the  state  board.  Bat  the  valuation 
fixed  by  local  assessors  may  be  revised  by  the  town,  and  then  by 
the  county  board,  whose  decision  is  final. 

INDIANA. 

The  law  of  taxation  is  the  same  as  in  Illinois,  except  in  three 
particulars : 

(1)  The  whole  capital  stock  is  liable  by  law  to  be  valued  by 
the  state  boarJ,  and  distributed  for  taxation  to  the  cDunties  and 
towns  in  proportion  to  the  length  of  road  in  each.  But  this  is  not 
done,  and  this  part  of  the  law  is  obsolete. 

(2)  Railroad  stock  in  the  hands  of  individuals  is  taxed  to  them, 
as  other  stocks  are. 

'^  (3)  There  is  no  appeal  from  excessive  valuation. 

IOWA. 

The  general  principle  is  equality  of  taxation  for  all  property. 
Assessments  are  made  on  the  value  of  the  entire  railroad  at  the 
estimated  value  of  each  mile,  including  in  the  estimate  right  of 
way,  bridges,  rolling  stock,  stations  and  all  other  property  exclu- 
sively used  for  railroad  purposes. 

There  is  no  franchise  tax  nor  tax  on  receipts ;  and  shares  ara 
taxed  at  their  market  value  to  the  holders  thereof. 

KANSAS. 

The  general  principle  of  taxation  is  assessment  on  all  property 
at  its  value  in  money.  "  Eailroad  property"  is  assessed  by  a 
state  board,  who  estimate  the  value  of  the  real  estate  connected 
with  the  right  of  way,  and  used  in  the  daily  operation  of  the 
road,  including  rails,  ties,  "franchises"  and  buildings.  To  this 
is  added  all  moneys,  credits  and  profits,  all  rolling  stock,  owned 
or  used  by  the  company.  And  the  taxable  value  as  ascertained 
by  this  addition  is  apportioned  among  the  counties  and  munici- 
palities in  proportion  to  the  length  of  road  therein. 

Real  estate,  not  included  in  the  above  description,  i.  e.,  real 
estate  not  used  in  the  daily  operation  of  the  road,  is  taxed  like 
the  land  of  individuals,  in  the  locality  where  it  lies. 


40 


Railroads  are  not  subject  to  a  franchise  tax,  whatever  the  word 
"  franchises  "  in  the  law  quoted  above  m  »y  mean.  Nor  are  they 
taxed  on  receipts,  except  as  they  swell  the  amount  of  money  or 
profits  on  hand  in  March,  when  the  valuation  is  made.  Stock  is 
not  taxed  to  its  holders.  Local  taxes  are  levied  by  local  authori- 
ties on  "  railroad  property,"  as  returned  to  them  by  the  state  board 
of  assessors.  State  taxea  are  apportioned  by  the  state  board,  and 
collected  by  the  county  treasurers.  R.-al  estate,  not  "railroad 
property,"  is  assessed  by  the  local  authorities,  with  an  appeal  to 
the  state  board,  whose  decision  is  finjl.  Payment  of  taxes  may 
be  made  by  semi-annual  installments.  Toi-s  method  of  assess- 
ment is  said  to  have  increased  the  amount  on  which  taxes  are 
levied  by  three  million  dollars  over  the  old  method  of  local 
assessment 

LOUISIAN.\. 

In  this  state,  the  capital  of  all  corporations  is  taxed,  and 
properly  "over  the  capital''  and  property  held  in  trust  for  busi- 
ness purposes  for  non-residents.  Otherwise,  there  is  no  special 
provision. 

MAINE. 

No  recognized  general  principle  seems  to  govern  the  railroad 
taxation  of  this  state.  Railroad  corporations  are  taxed  for  real 
estate  in  each  town  just  as  individuals  are  taxed  for  town  pur- 
poses, but  the  track  is  not  deemed  to  be  real  estate.  They  are 
not  taxed  for  personal  property.  They  are  subject  to  a  franchise 
tax  of  one  and  a  half  per  cent,  on  the  value  of  the  franchise.  This 
ralue  is  found  by  ascertaining  the  market  value  of  the  stock  of 
each  road,  and  deducting  the  value  of  the  property  subject  to  local 
taxation.  When  roads  extend  beyond  the  state,  the  value  is  pro- 
portioned to  the  length  of  line  within  the  state.  This  is  done  by 
the  governor  and  council. 

The  state  treasurer  credits  each  town  according  to  the  shares" 
held  therein ;  and  the  remainder  is  retained  by  the  state. 

Stock  is  not  taxed  to  the  owners  thereof.  No  taxes  are  levied 
on  receipts,  nor  on  rolling  stock. 

Local  taxes  are  laid  by  each  town  on  real  estate  outside  of  the 
location,  with  an  appeal  to  county  commissioners  in  case  of  exces- 
sive valuation. 


il 


In  case  of  overvaluation  by  the  governor  and  council,  there  is 
no  appeal. 

MARYLAND. 

In  this  state,  all  taxation  of  railroads  for  state  purposes  is  on 
gross  receipts.  County  and  municipal  taxes  are  laid  on  property, 
as  the  declaration  of  rights  requires  all  taxes  to  be.  Real  estate 
is  taxed  for  county  and  municipal  purposes  where  it  lies.  Per- 
sonal propirty  is  taxed  where  the  home  office  is  established, 
when  the  railroad  company  has  not  a  capital  divided  into  shares 
or  has  shares  wholly  or  in  part  exempt  from  taxation.  If  there 
is  no  home  office  in  the  state  their  personalty  is  not  taxed. 

Holders  of  stock  are  taxed  thereon  ;  but  in  computinf^  the  value 
thereof,  the  assessed  value  of  the  real  estate  is  deducted  from  the 
whole  value  of  the  capital  stock,  which  is  computed  by  the  state 
tax  commission.  And  an  allowance  is  made  on  each  shareholder's 
stock  in  proportion  to  this  amount.  The  corporation  pays  the 
tax  for  each  stockholder,  and  charges  him  with  the  amount. 

The  tax  on  gross  receipts  is  one-half  of  one  per  cent.,  piid  di- 
rectly to  the  stats  treasurer.*  Rolling  stock  is  taxed  at  the  home 
office,  if  that  is  within  the  state.     Otherwise  it  is  not  taxed. 

The  appeal  tax-court,  in  Baltimore,  and  the  county  commis- 
sioners in  the  several  counties,  correct  valuations,  and,  under 
direction  of  the  state  tax  commission  and  attorney  general,  strike 
off  such  property  as  is  not  subject  to  taxation. 

The  law  as  above  stated  is  modilied  in  regard  to  some  railroad 
companies  by  their  charters,  which  are  irrepealable  except  by  can- 
sent. 

MASSACHUSETTS. 

The  assessors  of  each  place  annually  report  to  the  tax  commis- 
sioner the  names  of  corporations,  except  banks,  established  or 
owning  real  estate  therein,  with  an  accjunt  of  the  real  estate  and 
machinery  in  said  place,  and  its  value  and  the  amount  at  which 
it  is  assessed,  and  also  the  amount  of  taxes  laid  for  the  year  in 
said  place.  Each  corporation  returns  a  list  of  stockholders,  with 
the  number  of  shares  held  by  each,  the  amount  of  capital  stock, 

•  Where  a  road  lies  partly  in  another  state,  it  is  taxed  on  gross  receipts  on  the  number  of 
miles  in  the  state,  if  the  company  returns  the  same ;  otherwise  on  such  proportion  of  gross 
receipts  as  the  aamber  of  miles  within  the  state  bears  to  iu  whole.lcngth. 


42 

the  par  value  and  market  value  thereof;  and  also  the  real  estate 
structures  and  machinery.  Railroad  companies,  in  addition, 
return  the  whole  length  of  their  lines,  and  the  length  lying  with- 
out the  slate.     Guardians,  executors,  etc.,  also  make  returns. 

The  tax  commissioner  ascertains  the  market  value  of  the  shares 
on  May  1,  preceding,  and  this  is  the  taxable  value  of  the  franchise- 
The  rate  is  determined  by  an  apportionment  of  the  whole  amount 
to  be  raised  by  property  taxes  iu  the  state  during  the  year,  as 
returned  by  the  assessors  upon  the  aggregate  valuation  of  all  the 
towns  and  cities  for  the  preceding  year.  From  the  valuation  for 
railroad  companies  is  deducted  (1)  an  amount  proportionate  to 
that  portion  of  their  length  lying  beyond  the  state  limits,  (2)  the 
value  of  real  estate  and  machinery  located  and  subject  to  local 
taxation  within  the  state.  An  appeal  is  given,  if  the  tax  com- 
missioner estimates  the  value  of  real  estate  and  machinery  at  a 
less  amount  than  the  assessors  have  done. 

Taxes  are  paid  by  the  railroad  corporations  to  the  state  treas- 
urer, who  is  nominally  tax  commissioner,  and  who,  with  the 
auditor  and  one  member  of  the  council,  constitute  a  board  of 
appeal  for  correction  of  all  errors,  and  their  decision  is  final. 
Stock  is  not  taxed  in  the  hands  of  the  holders  thereof ;  nor  is  there 
any  franclise  tax,  except  as  above  stated,  nor  any  tax  on  receipts. 
The  proportion  of  tax  received  correspon^hg  with  the  amount  of 
stock  owned  in  each  city  or  town  is  credited  to  that  place. 

Land  to  the  width  of  five  rods  taken  for  the  railroad,  is  exempt 
from  taxation  ;  and  so  are  all  buildings  for  railroad  purposes 
erected  on  such  strip  of  land. 

MICHIGAN. 

Id  lieu  of  all  taxes,  except  those  on  real  estate  not  used  for 
railroad  purposes,  a  tax  is  laid  of  (2)  two  percent,  on  gross  earnings 
not  exceeding  $2,000  per  mile,  and  of  (3)  three  per  cent  on  gross 
earnings  exceeding  that  sum.  There  is,  also,  a  tax  of  three  per 
cent,  on  receipts  from  passengers  carried  in  any  palace  or  sleeping 
car,  or  any  car  for  which  an  extra  price  is  paid ;  and  a  tax  of  two 
per  cent,  on  gross  receipts  derived  from  the  leasing  or  hiring  of 
cars  by  any  "  special,"  "  fast,"  "  colored,"  or  other  freight  line. 

Real  estate  not  used  for  railroad  purposes  is  subject  to  local 


43 

taxes  where  it  lies.  There  is  no  tax  on  the  personal  property  o 
railroad  companies,  nor  on  franchise,  nor  on  rolling  stock.  Nor 
is  stock  taxed  in  the  hands  of  its  owners.  There  is  no  apportion- 
ment of  tax  among  counties  or  municipalities,  the  whole  amount 
being  paid  to  the  state  and  devoted  to  special  purposes. 

The  railroads  incorporated  before  1850  were  subject  to  an 
annual  tax  of  f  of  one  per  cent  on  their  capital  stock  and  all 
loans  used  in  construction.  The  Lake  Shore  and  the  Michigan 
Central  are  still  taxed  in  this  way. 

MINNESOTA. 

A  tax  of  three  (3)  per  cent,  on  gross  earnings  is  laid  in  lieu  of 
all  other  taxes,  but  by  special  legislation  the  amount  of  tax  has 
been  reduced  for  some  roads  for  a  term  of  years,  including  the 
Northern  Pacific. 

Taxes  for  ea-^h  year  are  assessed  on  the  earnings  for  the  year 
preceding. 

MISSISSIPPI. 

A  franchise  tax  of  $80  per  mile,  and  of  $40  per  mile  for  narrow- 
gauge  roai],  is  laid,  in  full  of  all  state,  county  and  municipal 
taxes  on  railroad  property. 

Eeal  estate  not  used  for  railroad  purposes  is  taxed  locally,  like 
the  land  of  individuals.  And  the  same  is  true  of  personal  property 
not  used  for  railroad  purposes.  Stock  is  taxed  to  its  holder  at  its 
market  value.     No  tax  is  laid  on  receipts,  nor  on  rolling  stock. 

One-half  of  the  franchise  tax  goes  to  the  counties  through 
which  the  road  runs;  the  balance  to  the  state.  Towns  are  pro- 
hibited from  taxing  the  roads  running  through  them.  There  is 
no  appeal,  nor  any  occasion  for  it, 

MISSOURI. 

The  constitution  of  Missouri  provides  that  all  railroad  corpora- 
tions in  the  state,  or  doing  business  therein,  shall  be  subject  to 
taxation  on  all  propsrty  owned  or  used  by  them,  and  on  gross  or 
net  earnings,  and  on  franchises  and  capital  stock. 

The  law  provides  that,  for  purposes  of  taxation,  each  road  shall 
furnish  the  state  auditor  a  statement  of  the  length  of  the  road,  and 
of  extra  tracks,  with  depots,  water-tanks  and  turn-tables ;  the 
length  in  each  county  and  municipality  ;  the  number  of  engines 


4^ 

and  cars  and  all  other  movable  property  owned  or  used  by  them, 
and  the  value  thereof.  Like  statements  are  sent  to  each  county 
court. 

The  statement  may  be  revised  by  said  court,  and  all  property 
omitted  is  taxed  at  double  its  cash  value.  The  state  board  of 
assessment  and  equalization  revises  the  estimates.  When  a  road 
extends  into  another  state,  where  rolling  stock  is  taxed,  such  a 
proportion  of  the  value  of  such  stock  as  the  length  of  the  road 
in  Missouri  bears  to  the  whole  length  thereof  is  taxed.  [Thus  if 
a  road  was  taxed  on  rolling  stock  in  one  other  state,  and  extended 
into  half  a  dozen  other  states  where  rolling  stock  was  not  taxed 
still  the  tax  on  such  stock  would  only  be  proportionate  to  the 
•whole  length  of  the  road.] 

The  state  board  apportions  the  value  of  the  property  above 
named  to  each  county  and  municipality  in  proportion  as  the  ratio 
of  miles  of  each  road  therein  to  the  whole  length  of  the  road  in 
the  state.     And  taxes  are  assessed  on  such  apportionment 

Local  taxes  are  assessed  on  all  property  not  specified  above, 
including  lands,  work-shops,  round-houses  and  other  buildings» 
furniture  and  other  personal  property,  by  local  assessors  in  the 
county  or  municipality  where  such  property  is.  The  assessment 
is  certified  to  the  county  court,  with  the  rate  of  levy,  and  that 
court  levies  the  tax  on  railroad  property  as  on  other  estates,  ex- 
cept the  school  tax.  The  average  rate  of  this  tax  is  ascertamed 
by  adding  the  local  rates  of  all  the  school  districts,  and  dividing 
the  sum  by  the  number  of  districts.  Then  taxes  are  levied  on  the 
railroad  company  on  the  proportionate  value  of  said  railroad  prop- 
erty. [The  distribution  of  the  amount  depends  upon  the  fact 
whether  counties  and  municipalities  have  subscribed  to  aid  rail- 
roads, and  also  upon  the  number  of  children  in  each  school  dis- 
trict] Lands  and  other  property,  not  taxed  under  the  general 
provisions  for  railroad  property,  are  taxed  in  the  school  districts 
where  they  are  situated. 

No  appeal  lies  from  the  decisions  of  the  state  board. 

NEBRASKA. 

Kailroad  officials  list  the  road-bed,  right  of  way,  rolling-stock, 
fixtures  and  personal  property,  stating,  also,  the  whole  number  of 
miles  in  the  state  and  in  each  county. 


.45 

This  list  is  sent  to  the  state  auditor.  The  state  board  of  equal- 
ization assess  the  propel ty  of  a  corporation  at  the  cash  value  for 
each  mile,  and  divides  the  whole  amount  by  the  number  of  miles, 
to  get  the  value  of  each.  In  doing  this,  they  use  the  report  aud 
any  other  information  they  can  get.  The  board  does  not  assess 
the  value  of  any  machine  shop  or  any  buildings  or  grounds  or  of 
any  other  real  estate;  but  the  assessors  of  "each  city  or  ward  or 
precinct"  assess  these.  The  auditor  certifies  to  the  county  clerks 
in  the  counties  where  the  railroad  property  lies,  the  amount  per 
mile  on  the  number  of  miles  assessed,  and  the  amount  in  each 
county.  The  count}' commissioners  adjust  the  number  of  miles 
and  amount  among  the  various  municipalities,  adding  50  per  cent, 
when  a  report  has  not  been  mnde  by  the  rai'road  company. 

There  is  no  tax  on  receipts  or  on  franchise. 

NEVADA. 

Railroad  taxes  are  assessed  on  the  cash  value  of  the  property 
in  each  county  by  the  county  assessors,  both  of  real  and  personal 
estate.  No  franchise  tax  is  laid,  nor  any  tax  on  receipts  ;  nor  is 
stock  taxed  to  the  holders  thereof.  Rolling  stock  is  taxed  in  each 
county  in  proportion  to  the  length  o^  road  therein.  Appeals  lis 
to  the  county  board  of  equalization. 

NEW   HAMreHIRE. 

Railroads  are  taxed  on  all  their  property,  including  road-bed, 
buildings,  rolling  stock  and  equipments,  at  the  average  rate  of 
taxation  in  all  the  towns  and  cities  of  the  state. 

There  is  no  tax  on  franchise,  nor  on  receipts,  nor  la  stock  taxed 
to  the  holders  thereof.  The  state  board  of  equalization  having 
found  the  value  of  the  road,  and  assessed  the  tax  thereon,  divide 
one-fourth  (i)  of  it  among  the  towns  through  which  the  road 
passes,  in  proportion  to  the  amount  expended  in  each  town  for 
risjht  of  wav  and  taxes.  The  other  three-fourths  is  divided  amone 
the  towns  in  proportion  to  the  stock  owned  therein,  and  the  state 
keeps  the  tax  on  shares  owned  by  non-residents  or  persons  un- 
known. 

NEW    JERSEY. 

All  railroad  companies,  unless  exempt  by  charter,  are  taxed 
one-half  per  cent,  on  the  true  value  of  the  road  used  by  them, 


46 

equipments  and  appendages.  The  company  makes  returns  of  this 
value;  the  railroad  tax  commissioners  have  power  to  revise  it 
and  an  appeal  lies  to  a  justice  of  the  supreme  court,  who  hears 
it  summarily. 

Upon  all  real  estate  owned  or  used  for  a  road,  except  the  main 
track  100  feet  in  width,  railroad  companies  pay  county  and  town 
taxes  where  it  is  situated,  at  one  per  cent  on  the  value,  except 
that  at  the  termini ;  each  road  may  have  ten  acres  with  the  build- 
ings thereon,  free  from  all  county  and  municipal  taxes. 

The  only  special  tax  on  personalty  seems  to  be  the  state  tax  on 
"equipment  and  appendages;"  and  there  is  no  other  provision 
as  to  the  rolling  stock.  There  is  no  franchise  tax,  nor  any  on 
gro33  or  net  receipts.  Stock  is  taxed  in  the  hands  of  the  owners 
thereof.  Valuation  for  county  and  municipal  purposes  is  made 
once  in  three  years  by  the  commissioner  of  railroad  taxation. 
Personal  property  not  connected  with  the  road  is  taxed  as  it  is  to 
individuals. 

Special  provision  is  made,  whereby  tlie  United  New  Jersey 
Railroad  and  Canal  Company  may  pay  a  fixed  sum,  $298,128.96, 
in  full  of  all  state  taxes  on  all  its  road?,  on  certain  conditions. 

NEW   YORK.      . 

In  this  state  there  are  no  taxes  except  local  ones,  and  these  are 
laid  on  the  real  and  personal  estate  in  each  municipality  accord- 
ing to  its  value,  as  taxes  are  laid  on  individuals.  There  is  no 
franchise  tax,  nor  any  tax  on  receipts ;  nor  is  stock  taxed  to  its 
holders. 

And  no  special  rule  is  followed  as  to  the  taxation  of  rollino- 
stock.  The  valuation  of  the  local  assessors,  if  regularly  made, 
is  final. 

OHIO. 

All  property  is  taxed  on  a  basis  of  its  true  value  in  monej-. 
The  real  estate  of  each  railroad  in  taxed  in  the  place  where  it 
lies;  but  personal  property  is  held  to  include  the  roadbed,  water 
and  wood  stations,  and  all  other  such  realty  as  is  necessary  for 
ths  daily  running  operation  of  the  road.  A  board  consisting  of 
county  auditors  of  the  counties  through  which  any  railroad  runs, 
estimates  the  value  of  all  the  personal  property  of  the  railroad 


47 

company,  including  the  above  named  items,  and  apportions  it 
among  the  counties  and  municipalities  throuejh  which  it  runs,  so 
that  to  each  "shall  be  apportioned  such  part  thereof  as  shall  equal- 
ize the  relative  value  of  the  real  estate,  structures  and  stationary 
personal  property  of  such  railroad  company"  in  the  state,  and  so 
that  the  rolling  stock  (including  that  hired  or  run  under  control 
of  the  company)  shall  be  apportioned  to  each  county  and  place 
in  proportion  to  its  part  of  llie  whole  road  in  the  state.  And 
when  only  part  of  the  railroul  is  in  the  state,  the  principal  sum 
to  be  apportioned  is  the  proportion  of  the  road  in  Ohio  to  the 
whole  road.  When  the  roaJ  is  wholly  in  one  county  the  auditor 
thereof  acts  as  a  board. 

The  county  boards  report  to  a  state  board  of  equalization,  which 
has  power  to  raise  or  reduce  the  valuation  of  each  road,  provided 
that  the  aggregate  valuation  cannot  be  reduced.  No  appeal  is 
provided. 

There  is  no  franchise  tax,  tax  n'~'r  on  receipts;  and  stock  in 
the  hands  of  individuals  is  taxed  to  them. 

OREGON. 

The  only  provision  peculiar  to  railroads  seems  to  be  that  rolling 
stock  is  taxed  in  the  county  where  the  principal  depot  or  business 
is  done,  but  if  either  terminus  or  any  depot  is  in  the  county  where 
the  principal  office  is,  it  shall  be  tixed  there. 

PENNSyLVANIA. 

All  railroad  companies  paying  dividends  of  six  per  cent,  or 
more,  pay  a  state  tax  of  one-half  mill  on  each  dollar  of  capital 
stock;  when  the  dividend  is  less  than  six  percent.,  the  tax  is 
three  mills  upon  each  dollar  of  appraised  value  of  capital  stock. 

In  addition  to  this  all  railroad  companies  (and  also  telegraph, 
palace  car  and  sleeping-car  cor.pjnies)  pay  a  tix  of  -^^  per  cent, 
on  gross  receipts.  Boiling  stock  is  not  separately  taxed.  No  tax 
is  laid  on  franchises,  and  no  tax  is  assessed  on  shares. 

Railroads  themselves  anJ  all  real  estate  and  structures  essential 
for  operating  the  roads  are  exempt;  bat  real  estate  and  structures 
only  incidentally  useful  for  the  trans ictioa  of  railroad  business 
are  taxable  locally. 

A  special  act  makes  the  real  estate  of  r.iilroads  in  Philadelphia, 


48 

except  superstructure  and  water  stations,  liable  to  local  taxes.    A 
similar  act  is  in  force  in  Pittsburgh. 

If  state  officers  are  dissatisfied  -with  the  valuation  of  capital, 
another  appra'sal  may  be  made ;  and  an  appeal  may  be  had  to  the 
court.  E.xcessive  appraisals  for  local  taxation  may  be  reviewed 
by  county  c  )mmis3ioners.  And  local  acts  give  appeals,  in  vari- 
ous places,  to  local  courts. 

r:-tode  island. 

Railroad  corporations  are  taxed  like  other  corporations  and  like 
individuals  on  the  value  of  their  estates.  Each  town  taxes  the 
roads  running  through  it  on  ihe  value  of  its  tracks  and  other  real 
estate,  but  not  apparently  on  personal  property.  No  franchise 
tax  is  levie:!.  Holders  of  stock  are  taxed  according  to  its  value. 
There  is  no  apportionment  nor  any  occasion  for  it. 

Appeals  may  be  made  from  the  judgment  of  the  assessors  to 
town  councils,  but  this  is  rarely  done,  a-i  public  notice  is  given  to 
each  person  to  state  to  the  assessors  his  propsrty  and  its  value. 

SOUTH   CAROLINA. 

The  constitution  requires  equal  taxation  of  all  propertv  accord- 
ing to  its  value.  By  law,  the  road-bed,  right  of  way  and  stations 
are  regardel  as  personal  property.  An  annual  return  is  made  of 
the  length  of  tracks,  main  and  side;  the  value  of  all  buildings, 
stationary  engines,  implements,  rolling-stock,  moneys  and  credits; 
also  of  the  value  of  the  whole  road  and  equipments  in  and  out  of 
the  state,  and  the  value  of  the  part  within  the  state.  The  return 
al?o  states  how  much  of  the  track  and  of  each  item  of  property  is 
in  each  county  and  in  each  town.  A  state  board  finds  the  value 
of  the  road-bed,  right  of  way,  rolling-stock,  moneys  and  credits, 
and  apportions  it  to  each  mile  of  the  main  track  in  or  out  of 
South  Carolina.  This  valuation  per  mile  is  multiplied  by  the 
number  of  miles  in  the  sta'.e,  and  in  each  county  and  t3W0,  and 
the  product  is  the  taxable  valuation  therefor.  To  this  is  added 
for  the  state  the  value  of  all  the  real  estate,  fixtures,  stationary 
engines,  machinery  and  stationary  property,  and  for  each  county 
and  town  the  value  of  such  property  situated  therein.  And  on 
this  amount  is  asse"sed  the  rate  provided  by  law  for  the  three 
classes  of  taxes. 


49 

There  is  no  tax  on  franchise  or  on  receipts ;  nor  is  stoctc  caxed 
to  the  holder  thereof.  There  is  no  appeal,  unless  it  should  be 
sought  by  injunction  from  the  courts. 

TE>'NESSEE. 

In  this  state,  the  whole  value  of  each  railroad  is  taxed  by  asses- 
sors chosen  for  that  purpose,  who  take  inio  view  the  worth  of  the 
property,  the  gross  and  net  earnings,  with  all  other  facts  bearing 
on  the  true  value.  Real  and  personal  estate  is  of  course  included, 
and  rolling  stock  as  part  of  the  personalty.  No  franchise  tax  is 
laid,  nor  any  tax  on  receipts  as  such.  Holders  of  stock  are  not 
taxed  therefor. 

When  the  valuation  of  each  road  has  been  fixed,  the  state  tax 
is  laid  thereon  as  on  other  property  ;  and  the  amount  is  divided 
for  local  taxation  according  to  the  number  of  miles  in  each  county 
and  municipality.  An  appeal  lies  to  the  three  chief  executive 
officers  of  the  state,  who  can  appoint  another  board  of  assessors  ; 
and  their  action  Is  final. 

Some  railroad  companies  in  this  state  are  protected  from  taxa- 
tion by  charter  exemption  not  yet  expired  ;  and  such  exemption 
has  recently  been  held  to  be  valid  by  the  supreme  court  of  Ten- 
nessee. 

TEXAS. 

Real  and  personal  property  are  taxed  by  each  county  and  mu- 
nicipality on  the  valuation  of  such  property  lying  therein.  The 
road-bed  and  rolling  stock  are  taxed  in  such  localities  according 
to  the  mileage  therein.  There  is  no  tax  on  receipts  or  on  fran- 
chise. The  holders  of  stock  are  taxed  thereon  as  on  other  personal 
property.  The  companies  make  returns  as  to  property  and  val- 
ues; assessors  have  power  to  change  the  valuation,  and  an  appeal 
lies  to  a  county  board  of  equalization,  whose  decision  seems  to  be 
final.  In  practice,  various  portions  of  the  road  are  assessed  at 
different  values  and  withour  reference  to  the  value  of  the  road  as 
a  whole. 

VERMONT. 

Railroad  companies  are  taxed  on  real  and  personal  estate  on  the 
same  principle  with  individuals,  except  that  the  road-bed  and  real 
estate  used  for  railroad  purposes  are  taxable  in  each  town  at  their 
4 


60 

valuation,  not  exceeding  $2,000  per  mile  of  main  line,  but  sucb 
roads  are  exempt  from  taxation  on  their  realty  for  five  years  from 
the  time  when  each  begins  to  run  regularly  into  or  through  any 
town  in  the  state ;  and  after  eight  years,  it  is  subject  to  the  general 
laws  of  taxation.  As  owners  of  personalty,  including  rolling 
stock,  railroads  are  liable  to  the  general  law  ;  but  part  of  that 
law  is,  that  debts  may  be  off-set  in  reduction  of  perso.nalty;  and 
the  result  is,  that  railroad  personalty  is  never  taxed.  There  is 
no  tax  on  franchise  or  receipts.  Holders  of  stock  are  taxed  there- 
for as  for  other  jn-operty.  As  to  the  assessment  of  road-bed,  no 
appeal  is  allowed.  Appeals  from  assessments  on  other  real  estate 
are  made  to  local  boards. 

VIRGINIA. 

The  constitution  provides  for  equal  taxation  of  all  property 
according  to  its  value,  and  gives  power  to  tax  incomes  in  exegs  of 
$600  per  year.  Each  road  reports  the  value  of  all  its  real  estate, 
specifying  road-bed,  stations  and  shops,  and  of  all  its  personal 
property,  specifying  rolling  stock  and  equipment,  and  also  specify- 
ing the  value  in  each  county.  The  amount  of  gross  and  net  earn- 
ings is  also  reported,  and  the  amount  of  interest  and  dividends 
paid,  payable  and  declared,  to  residents  and  non-residents.  The 
whole  length  and  the  length  of  the  road  within  the  state  are  given, 
and  the  earnings  are  apportioned.  The  company  ,is  made  col- 
lector of  taxes  on  dividends  and  inljerest  paid  by  it. 

A  tax  of  -J  of  1  per  cent,  is  laid  on  the  real  and  personal  prop- 
erty of  each  road,  one-fifth  of  which  is  applied  to  the  public 
schools.  On  the  indebtedoess  of  each  company,  in  lieu  of  the 
property  tax  thereon,  a  tax  of  fifty  cents  on  $100  of  the  market 
value  of  the  bonds  is  paid  out  of  the  interest  due  on  such  indebt- 
edness. And  this  [tax  is  collected  by  the  company  on  non-resi- 
dents as  well  as  on  residents. 

There  is  no  franchise  tax.  Holders  of  stock  pay  taxes  accord- 
ing to  its  market  value.  Counties  and  towns  receive  the  report 
made  by  the  companies  through  the  state  auditor,  and  levy  taxes 
on  real  and  personal  estate  at  the  same  valuation  that  is  used  by 
the  state. 

In  general,  an  appeal  lies  from  the  valuation  of  assessors  to  two 
voters  appointed  by  the  parties,  whose  award  is  final. 


51 


WEST  VIRGINIA. 


Each  company  reports  all  its  property  in  the  state  and  the  pro- 
portionate value  of  rolling  stock,  depending  on  the  number  of 
miles  in  the  state  as  compared  with  the  whole  length  of  the  road. 
This  proportionate  value  and  the  value  of  all  personal  property, 
money,  credits  and  investments  is  added  to  the  real  estate  and 
apportioned  to  each  county  in  proportion  to  the  amount  of  real 
estate  and  fixed  property  therein  as  a  basis  for  assessment  But 
all  property,  real  and  personal,  used  for  railroad  purposes,  and  all 
real  estate  which  the  company  is  allowed  to  hold,  is  to  be  assessed 
at  its  actual  value,  without  regard  to  cost 

The  board  of  works  directs  the  auditor  to  assess  for  state  and  for 
general  free  school  purposes  on  this  valuation,  and  for  free  school 
purposes  in  town  and  school  districts  through  which  the  road  runs. 

County  supervisors  apportion  the  amount  to  each  town  and  dis- 
trict through  which  the  road  runs,  according  to  the  value  therein. 

If  the  report  is  not  filed,  or  is  not  satisfactory,  a  board  of  com- 
missioners is  appointed  of  one  freeholder  from  each  congressional 
district,  who  assess  as  best  they  can. 

The  provisions  for  collecting  are  complicated. 

Real  estate  used  for  any  purpose  not  immediately  connected 
with  the  road,  is  taxed  like  the  property  of  individuals.  When 
the  capital  of  railroad  (or  other)  companies  is  taxed,  the  stock- 
holders are  not  taxed  thereon. 

WISCONSIN. 

A  state  license  tax  takes  the  place  of  all  state  and  local  taxes 
on  all  real  and  personal  property  used  lor  railroad  purposes,  ex- 
cept special  assessments  for  local  improvements  in  town  and  vil- 
lages. 

The  following  is  the  text  in  full  of  the  Wisconsin  statute,  which 
imposes  in  fact  a  tax  on  gross  receipts : 

"  The  annual  license  fees  for  the  Operation  of  such  railroads 
shall  be  as  follows : 

"  1.  Four  per  centum  of  gross  earnings  of  all  railroads,  except 
those  operated  on  pile  and  pontoon,  or  pontoon  bridges,  whose 
gross  earnings  equal  or  exceed  three  thousand  dollars  per  mile 
per  annum  of  operated  railroad. 


52 

"2.  Five  dollars  per  mile  of  operated  railroad  of  all  railroads 
■whose  gross  earnings  exceed  one  thousand  five  hundred  dollars 
per  mile  per  annum,  and  are  less  than  three  thousand  dollars  per 
mile  per  annum  of  operated  road,  and  in  addition  two  per  centum 
of  their  gross  earnings  in  excess  of  fifteen  hundred  dollars  per 
mile  per  annum. 

"  3.  Five  dollars  per  mile  of  operated  road  by  all  companies 
whose  gross  earnings  are  less  than  fifteen  hundred  dollars  per 
mile  per  annum. 

"  4.  Two  per  centum  of  the  gross  earnings  of  all  railroads  which 
are  operated  upon  pile  or  pontoon,  or  pontoon  bridges,  which 
gross  earnings  shall  be  returned  as  to  such  parts  thereof  as  are 
within  the  state. 

"  One-half  of  such  license  fee  shall  be  paid  at  the  time  the 
license  so  issues,  and  one  half  on  or  before  the  tenth  day  of  August 
in  each  year." 


3  01 


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